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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Thomas Heath used his column to give readers some incredibly bad investment advice. The piece titled, "a first lesson on the stock market: don't run from a good sale," told readers that the recent dip in the market makes this a good time to buy stock. This makes no sense.

Whether or not it is a good time to buy stocks depends on the price of stock relative to the fundamentals of the market. This means current price-to-earnings ratios and the prospect for future earnings growth. Current price-to-earnings ratios, at well over 20 to 1 by most measures, are high by historical standards. Most economists are not projecting especially good profit growth in the years ahead, but a big tax cut may allow shareholders to keep a larger portion of their gains, which would make stock more valuable.

But the point is not whether it is a good or bad time to buy stock, the point is the fact that stock prices have fallen really doesn't tell you anything. In March of 2000, the Nasdaq peaked at just over 5000. It fell back from this peak, so that a month or so out it was at 4,000. By Heath's investment advice, everyone should have taken advantage of this big sale. After all, prices were down 20 percent from their peak.

If you followed the Heath investment strategy you would have lost more than two thirds of your money as the Nasdaq eventually bottomed out at just over 1200 in the fall of 2002. While the Nasdaq did eventually come back and is now near 6,400, this would not have provided much of a return if you bought in at 4,000. Adjusted for inflation, this would give a real return of just over 11.0 percent over a seventeen year period. Dividends would add to this modestly, but since most Nasdaq stocks pay little or no dividend, the return would still be extraordinarily low over this period.

The moral of this story is that if the price of an over-valued asset falls, it is less over-valued, but a drop in price does not mean that the asset is under-valued. An investment advice column should show a little clearer thinking on this issue.

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I know we all share that fear every time we are in a huge traffic jam or face a forever long line at the grocery store. This fear appears at the end of an Arthur Brooks column berating a country that just elected Donald Trump for being unwilling to take risks. (Okay, it was a foolish risk, but you can't argue it wasn't a risk.)

Brooks tells us that the reluctance to take risks:

"Family formation, perhaps the ultimate personal leap of faith, looks to be another victim of this imprudent hesitation. Census Bureau demographers recently reported that while only a quarter of 24- to 29-year-olds were unmarried in the 1980s, almost half of that age group is unmarried today. And delaying the jump to adulthood has real social consequences. Last August, the Centers for Disease Control announced that the United States fertility rate had fallen to its lowest point since they began calculating it in 1909."

I don't see the problem here. Certainly, it is important that people feel they have sufficient security and support to have children if they want them. This means secure incomes, access to health care, and access to child care so that parents of young children have the ability to work. But if large numbers of young people still choose not to have kids, so what? Brooks may be worried about running out of people, but fans of arithmetic don't share this concern.

It's striking that just last month the New York Times ran a column warning that we were going to be running out of jobs because robots were taking all of them. It speaks to the unbelievably bad state of economics that the country's leading newspaper somehow thinks that the arguments that we are running out of people and that we are running out of jobs are both plausible. This would be comparable to a situation in the medical profession in which, depending on the doctor we see, we will find out that we are 50 pounds overweight and desperately need to go on a diet or 50 pounds underweight and need to start eating more.

If the medical profession routinely produced such diametrically opposed diagnoses most people would probably stop seeing doctors and save their money for something more useful. Unfortunately, we seem destined to waste an ever large share of our money paying the salaries of economists.

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Everyone who has been through an intro econ class knows how bad a 20 percent tariff on steel or clothes is. So naturally, all economists are outraged by patent monopolies for prescription drugs, which are the equivalent of tariffs of thousands of percent. Okay, that's not true; economists seem to only get upset about the tariffs on steel and clothes.

Nonetheless, the textbooks are right: patent monopolies lead to massive corruption. The NYT has a good piece on their increased lobbying efforts in the era of Trump. 

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The Washington Post has been running a multi-part series on the country's disability programs. The premise, as stated in the most recent installment, is that we are seeing:

"...decades-long surge in the nation’s disability rolls."

The formula then involves profiling one or more families who depend on disability payments from the government instead of work for their primary source of income. Usually, the profiles show family members to be reluctant to work and to have drug problems and other unhealthy habits.

While this situation undoubtedly describes a substantial number of people in the United States, the idea that the number of people getting disability payments is exploding is a Washington Post invention, not a fact in the real world. The graph below shows disability payments as a share of GDP from 1980 to 2013.

Book4 18176 image001

Source: OECD.

While the share of GDP going to disability payments did rise over this 33 year period, the increase was just over 0.3 percentage points, a rise of 30 percent. Furthermore, Social Security disability payments, the largest component of this spending, has fallen by 0.07 percentage points of GDP over the years from 2013 to 2016, leaving an increase of less than 25 percent measured as a share of GDP over 46 years. (The Social Security Trustees project payments as a share of GDP will fall somewhat more this year.)

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Catherine Rampell has a nice column pointing out how Republican efforts to block suits against companies that abuse their customers effectively deny customers the opportunity to use the legal system when they are wronged. The argument is well-taken but it doesn't go far enough. Donald Trump and the Republicans are also encouraging waste that will be a drag on economic growth,

The point here is simple, although it always gets lost in the discussion. Good economists assume that people are motivated by money. If you're a reasonably competent lawyer you can write contracts in ways that the typical consumer will either not understand or not take the time to read. If you put in wording in these contracts that screws the consumer, then you make a lot of money for your employer which they will be happy to share with you.

The implication, for people who believe in free markets and economic incentives, is that if we allow people to make money by writing deceptive contracts that screw people, then they will write deceptive contracts that screw people. This means that instead of doing something productive for the economy, we will have many highly educated people devoted their skills to an activity with zero economic value. In fact, their work actually has negative economic value, since consumers will know they have to spend time scrutinizing contracts if they don't want to be screwed.

So the opponents of the Consumer Financial Protection Bureau and related measures to protect consumers are not just arguing for another way to redistribute upward, they are arguing for a policy that increases waste and slows economic growth. But hey, no one ever said that we couldn't get greater inequality without having to sacrifice economic growth.

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Most economists would probably agree that a tax reform that cleaned up loopholes could provide a boost to growth. Most would probably also agree that the 1986 tax reform was more good than bad in this respect. (Lowering the top individual tax rate to 28 percent would fall in the "bad" category for many of us.) But it is unlikely that many would endorse the claim in James B. Stewart's column that after the tax reform:

"The economy (and the stock market) soared."

This one is clearly wrong. Growth in the five years following the passage of the tax cut was considerably worse than in the ten years preceding it or the next ten years as shown below.

Book2 2174 image001

Source: Bureau of Economic Analysis.

Growth in the five years following the tax reform averaged just 2.6 percent. That compares to 3.5 percent in the five years preceding the reform and 3.4 percent in the subsequent five years. It accelerated to 3.7 percent in the next five year period. I suppose some folks may want to claim the late 1990s boom was due to the 1986 tax reform, but the price of that sort of delayed effect means that the Johnson-Nixon administrations deserve credit for the 1980s growth and the current weak growth should be laid at the doorstep of George W. Bush.

There are of course complicating factors and the tax reform could have been a boost to growth that was offset by other factors, but the simple claim that we cut taxes and the economy boomed is clearly not true.

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It would have been useful if the NYT had clarified the strategy being proposed by President Trump and Republicans in this piece headlined "'let Obamacare fail,' Trump says as G.O.P. health bill collapses." There is no reason to think that Obamacare as written into law with the Affordable Care Act would fail. The exchanges are actually working pretty well in the states with Democratic governors committed to making the law work. The problem of insurers dropping out of the exchanges leaving no competition is overwhelmingly a red state problem where Republican politicians have sought to sabotage the program.

It is also worth noting that often repeated claim that the system is suffering badly from a lack of young healthy people signing up, as implied by this Washington Post editorial, is badly confused. The number of uninsured has actually fallen by more than the Congressional Budget Office projected, so there is no story of a massive problem of people not signing up for insurance. There is a problem that more people are still on employer provided insurance and not in the exchanges. Since these people are relatively healthy (they are mostly working full time and many are older, meaning they would pay higher premiums), their loss to the exchanges may be an issue.

However, the arithmetic shows that more young healthy people signing up could not make that much difference to the program. Suppose another 2 million overwhelmingly healthy people signed up for the exchanges. This would be a massive increase, since there are probably not much more than 2 million young healthy people who are not currently insured. (They have to also be citizens or legal residents to qualify.) The average premium for a bronze plan (presumably what healthy people who don't really want insurance would buy) is $2,700 a year. If we assume that insurers would pocket half of this money as profit, that comes to a net gain to insurers of $2.7 billion a year.

We are supposed to believe this is what determines whether Obamacare sinks or floats?

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A news analysis in the NYT by Jennifer Steinhauer argued that Republicans were rediscovering an old truth in their effort to repeal the Affordable Care Act, that it is hard to take away benefits that the government has given. While the point is surely right, the piece left out an important point, the Republican effort was based on a lie.

Republicans, and especially President Trump, rallied public support for repeal of the Affordable Care Act (ACA) based on the complaint that it wasn't generous enough. They argued that the premiums and deductibles were too high, their plan would give people better insurance.

This was a complete lie, but many people who had legitimate complaints about ACA likely backed Trump and other Republicans with the expectation that they would give them better insurance. Since this is clearly the opposite of what repeal is about, it makes it especially difficult for the Republicans to tell the people who voted for them expecting better insurance that they will have to pay much more money for worse insurance.

This is the situation the Republicans now find themselves in. Essentially, they have to own up to the fact that they have been lying for seven years about the central item on their political agenda.

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The "Democracy Dies in Darkness" folks at the Washington Post somehow feel they have an obligation to print lies from the White House on their opinion page. How else can one explain the decision to run a column from Marc Short and Brian Blase that calls the Congressional Budget Office's (CBO) estimates of the impact of the Republican health care plans "fake news." (The authors are respectively, assistant to the president for White House legislative affairs and special assistant to the president for the National Economic Council.)

The column is chock full of lies. (Sorry, with this crew there is no point in trying to be polite. They are liars, let's not pretend anything else.) It starts by trying to generically discredit CBO's analysis of health care plans.

"When Obamacare passed in 2010, the CBO projected a healthy individual market with 23 million people enrolled in exchange plans by this year. The CBO predicted that by 2017, exchange plans would be profitable and annual premium increases low."


"But this never happened. Today, there are only 10 million people enrolled in exchange plans — about 60 percent fewer than expected. (Contrary to some claims, this is not because more people have maintained employer plans than the CBO expected; the reduction in employer coverage has been greater than the CBO projected, and overall about 9 million more people are uninsured now than projected.) Absent the projected bounty of young, healthy consumers, health insurers are abandoning the exchanges, leaving a third of American counties with only one insurer to choose from. As insurers continue to flee the exchanges, consumers will face even fewer options next year."

CBO was not overly optimistic about Obamacare, it was actually overly pessimistic. As I wrote a couple of months back:

"Actually, CBO was overly pessimistic about Obamacare. If we look to CBO's last report on the Affordable Care Act, before the exchanges began operation in 2014, it projected that there would be 29 million people uninsured as of 2017 (Table 3). In its most recent analysis, it puts the number of uninsured in 2017 at 26 million (Table 4). In other words, the number of people who are uninsured under the ACA is 3 million fewer than CBO had predicted back in 2012.

"In what world is overestimating the number of uninsured 'overly optimistic?' It is true that fewer people are in the exchanges than CBO expected. This is due to the fact that more people have qualified for Medicaid and also more people are receiving employer-provided insurance, as fewer companies than expected dropped coverage."

The premiums have risen more in the last few years than projected because they were originally lower than projected. Premiums for 2017 are pretty much right where CBO had projected. And in states run by Democratic governors who are trying to make the Affordable Care Act work, the exchanges are doing just fine.

In short CBO gets an A- for its record on forecasting Obamacare, the White House crew gets a big fat "L" for lying.

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The NYT shows us that the skills shortage is real in an interview with Sarah M. Smith, the owner of a roofing company in Nebraska. In the interview, Ms. Smith explains why she needs foreign workers, on H2-B visas, since she is unable to get native born workers or greencard holders for the $17 an hour she is offering.

Ms. Smith explains:

"We have offered the $17-an-hour wage because it is the prevailing wage determination for this type of work, according to the United States Department of Labor. We do offer incentives and bonuses above that. And just to note, Nebraska’s minimum wage is $9 an hour."

She is then asked why, if she can't find enough workers, she doesn't offer a higher wage. Ms. Smith responds:

"In response to the article, I got an email that said if we were to offer $35 an hour with health care benefits, we would definitely get people to apply; it said people who were highly qualified applicants with years of experience would probably line up at our door.

"My response is: We would love to be able to offer $35 an hour as starting pay, but are you in turn willing to pay premium prices for your next roof replacement? A lot of customers we get through online lead services like Thumbtack are people looking for the best deal. They want to collect proposals from four to five businesses and most of the time choose the cheapest one.

"We want to compensate our employees fairly for the work they do and the risk they take, but we wouldn’t be able to stay in business if we doubled the hourly rate. It’s not just their hourly wage that becomes a factor. Insurance in the roofing industry is extremely expensive. Not only are we required to carry expensive general liability insurance, we also have to have workers’ compensation insurance for employees on the roof. That comes to 40 percent of their wage. And on top of that, there’s payroll tax.

"We also do a lot of insurance restoration work like hail damage claims, and in those cases the insurance provider determines what they pay for labor and we work with it. If we come back saying it’s going to cost us way more on labor to do the job, the homeowner isn’t likely to want to cover the extra cost, especially not above their out-of-pocket deductible."

Okay, let's for the moment ignore the idea that Ms. Smith would pay $35 an hour as starting pay. Let's imagine that she offered $20 an hour, roughly an 18 percent increase over her current pay and presumably substantially more than her competitors.

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Office of Management and Budget Director Mick Mulvaney had a Wall Street Journal column highlighting the benefits of "MAGAnomics." The piece can best be described as a combination of Groundhog Day and outright lies.

In terms of Groundhog Day, we have actually tried MAGAnomics twice before and it didn't work. We had huge cuts in taxes and regulation under both President Reagan and George W. Bush. In neither case, was there any huge uptick in growth and investment. In fact, the Bush years were striking for the weak growth in the economy and especially the labor market. We saw what was at the time the longest period without net job growth since the Great Depression. And of course, his policy of giving finance free rein gave us the housing bubble and the Great Recession.

The story of the 1980s was somewhat better but hardly follows the MAGAnomics script. The economy did bounce back in 1983, following a steep recession in 1981–1982. That is generally what economies do following steep recessions that were not caused by collapsed asset bubbles. Furthermore, the bounceback was based on increased consumption, not investment as the MAGAnomics folks claim. In fact, investment in the late 1980s fell to extraordinarily low levels. It is also worth pointing out that following both tax cuts, the deficit exploded, just as conventional economics predicts.

By contrast, Clinton raised taxes in 1993 and the economy subsequently soared. It would be silly to attribute the strong growth of the 1990s to the Clinton tax increase; other factors like an IT driven productivity boom and the stock bubble were the key factors, but obviously, the tax increase did not prevent strong growth.

The outright lies part stem from the comparison to prior periods' growth rates. Mulvaney notes that the 2.0 percent growth rate projected for the next decade is markedly lower than the 3.5 percent rate that we had seen for most of the post-World War II era.This comparison doesn't make sense.

We are now seeing very slow labor force growth due to the retirement of the baby boom cohort and the fact that the secular rise in the female labor force participation rate is largely at an end. MAGAnomics can do nothing about either of these facts. Slower labor force growth translates into slower overall growth.

Mulvaney also complains about government benefits keeping people from working. The idea that large numbers of people aren't working because of the generosity of welfare benefits shows a startling degree of ignorance. The United States has the least generous welfare state of any wealthy country, yet we also have among the lowest labor force participation rates. The idea that we will get any substantial boost to the labor force from gutting benefits further is absurd on its face.

Mulvaney apparently missed the fact that energy prices have plummeted in the last three years. Oil had been over $100 a barrel, today it is less than $50. While it is always possible that it could fall still further, any boost to the economy from further declines will be trivial compared to what we have seen already. It would be amazing if Mulvaney was ignorant of the recent path in energy prices.

In short, there is nothing here at all. Mulvaney has given us absolutely zero reason that Trump's policies will lead to anything other than larger deficits, fewer people with health care, more dangerous workplaces, and a dirtier environment.

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Several news outlets have reported that the Congressional Budget Office (CBO) does not accept the Trump administration's claims that its program will lead to a big surge in growth. It is worth mentioning in reference to this dispute that the "robots will take all the jobs" gang agrees with Trump in this dispute. Many people in the debate are probably not aware of this fact because it requires an understanding of third-grade arithmetic.

Economic growth is the sum of labor force growth and productivity growth. There is not too much dispute about the rate of growth of the labor force over the next decade, since it is mostly due to population growth. Apart from large changes in immigration policy, we can't do much about the number of working-age people who will be in the U.S. over the next decade.

The main question in projecting economic growth is therefore the rate of productivity growth. CBO essentially projects that the slowdown of the last decade will persist, with productivity growth averaging roughly 1.5 percent annually. The Trump crew is betting on a more rapid pace of productivity growth, as are the robots will take all the jobs gang. After all, robots taking the jobs of workers is pretty much the definition of productivity growth.

So, there are many reasons for mocking Trump and his administration, but if any of the robots will take the jobs gang mock the Trump growth projections, they are showing their ignorance. They agree with Trump's projections of more rapid growth, they are just too confused about the arithmetic and economics to know it.

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I have often joked how when we have a political debate after we watch the candidates stake out various claims and positions, we then see reporters talk about their body language. They tell us who looked confident and sincere and who seemed cautious or in other ways unsteady.

This is infuriating because this is exactly the area in which reporters have no comparative advantage over the people viewing the debate. We all engage in conversations and negotiations with people in our everyday life. Most of us are used to assessing the sincerity and integrity of the people we deal with. When we are watching politicians put forward their case on television we can all judge their sincerity and confidence. There is no particular reason to believe that the reporters giving their commentary can do a better job at this than the rest of the people watching the debate.

On the other hand, the reporters could, in principle, know more about the truth of the politicians' claims. They could know about the background to their policy proposals, where they have been tried, and the issues that have been raised by various experts. Reporters almost invariably fail to provide this sort of analysis, which would be a useful service to their audience.

Anyhow, we got a full and explicit example of the body language treatment this morning on National Public Radio. Their discussion of the meeting between French President Emmanuel Macron and Donald Trump explicitly focused on the body language between the two leaders and assured us that they have struck up a genuine friendship.

I didn't have a chance to see the events on television, but let me record my skepticism here. At least we now know for sure the skills required of NPR reporters.  

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Senator Toomey is apparently too young to remember the financial crisis that resulted from the collapse of the housing bubble. He told the Washington Post that he thinks Medicare cost increases will lead to a financial crisis:

"'It’s a guaranteed financial crisis if we don’t do something about our entitlement programs,' said Sen. Patrick J. Toomey (R-Pa.), who has pushed for indexing Medicaid to a lower inflation rate. 'It’s not a question of whether that happens, it’s just a question of when, and how devastating, that is.'"

While it is possible to see how higher Medicare costs would lead to larger budget deficits, if Toomey and his Republican colleagues decide never to raise taxes or cut other spending, there is no obvious way that this leads to a financial crisis. The last crisis came about because a housing bubble was fueled by loans. When housing prices collapsed, trillions of dollars in loans went bad. While this is a fairly straightforward story, it is very difficult to see how rising Medicare costs are more likely to lead to a financial crisis than a Superbowl victory by the Cleveland Browns.

It might have been helpful to point out to readers that the Senator doesn't appear to know what he is talking about.

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Aaron Carroll had an interesting Upshot piece comparing the merits of Medicaid and private insurance. It focuses on the fact that Medicaid is largely free for beneficiaries, while private insurance typically has substantial co-pays and deductibles. The piece points out that these fees can provide a substantial disincentive for getting health care, especially for lower income people.

While this might be a good way to save the system money if it discourages unnecessary care, which was a major reason the Affordable Care Act encouraged such fees, research shows that people also put off necessary care as a result of such fees. As a result, private insurance may end up leading to worse health outcomes than Medicaid for many low- and moderate-income people.

While this discussion is useful, there is another aspect to the fees that it ignores. Insurers often make mistakes which require patients to spend many extra hours pursuing claims. In many cases, they may not be compensated for care which should be covered if they don't spend the necessary time. Even if they do get compensated, this is a needless waste of people's time which is not factored into standard analysis on health care costs.

While it is always dangerous to generalize from very personal experiences, my guess is that my wife and I had to follow up in some manner on at least 20 percent of our claims. In some cases, this could be a single phone call, in other cases it could mean extensive back and forth between the provider and insurer, requiring multiple documents and authorizations. It is hard to believe that our experience is all that atypical or that we are especially bad at filling out forms. (My wife is also an economist who is pretty good at dealing with forms and numbers.)

Anyhow, this is an aspect of co-pays and deductibles that can be especially annoying to patients. Remember, people are most likely to be dealing with large numbers of claims when they are suffering from a health problem. This is not the best time to add another problem to their life.

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Regular readers of the NYT and other leading outlets might well get that impression. The one-sided nature of the discussion of these deals (invariably dubbed "free" trade agreements, because no one can be opposed to freedom) is hard for careful readers to miss.

We got yet another example with a column warning that Donald Trump may kill the bourbon boom with his trade policy. The piece uses the example of bourbon to tell us all the ways in which Trump's decision to pull back from the Trans-Pacific Partnership and other trade deals can harm people in the United States and be bad for the world generally.

Starting at the basics, it tells us:

"Take Vietnam, a TPP member that increased American spirits imports by 173.9 percent between 2015 and 2016, to $45.9 million, making it the category’s fastest-growing importer. Under the trade deal, the country is expected to drastically increase its American whiskey consumption.

"Without American membership in the TPP, a 12-nation pact that created zero tariffs for American products, Vietnam’s 45 percent duty on bourbon and other distilled spirits will no longer be phased out, putting those expectations on ice."

There are several points worth noting here. First, apparently, our whiskey exports to Vietnam appear to be doing just fine even with the 45 percent tariff. Perhaps U.S. whiskey is considered a luxury in Vietnam and the people who buy it are not that concerned about the price. I have no idea whether that is the case, but is possible that the reduction or elimination of the tariff may not affect sales very much.

The second point is that the implicit assumption in this story is that the people in Vietnam have no interest in getting cheaper whiskey. The piece assumes that they will continue to impose a 45 percent tax on the whiskey they buy from the United States for the indefinite future. This is, of course, possible, but it's also possible that Vietnamese with access to textbooks on public finance, or who like U.S. whiskey, will push their government to reduce the 45 percent tax with or without a trade deal.

Finally, we should be asking how people in the United States feel about paying more for their whiskey. After all, there is a limited amount of whiskey that U.S. distilleries can produce, at least in the short-term. If Vietnam and other countries will buy more, then there is less left for us whiskey drinkers back in the United States.

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Folks who passed their intro econ class know that it is net exports (exports minus imports) that affect output and employment. Not exports alone. Nonetheless, we find people like Washington Post columnist Robert Samuelson telling readers that Trump's decision to pull out of the Trans-Pacific Partnership (TPP) might undermine his agenda because "being outside these agreements [a TPP without the U.S. and European Union-Japan trade deal) would weaken U.S. exports."

Since it is not exports that matter for output and employment, but net exports, it is not clear that Trump should be worried. The United States International Trade Commission (USITC) projected that the TPP would lead to a net loss of manufacturing jobs, meaning that it would increase imports more than exports. Since Trump made increasing manufacturing employment a centerpiece of his campaign, it doesn't seem unreasonable that he would oppose a deal that is projected to reduce manufacturing employment.

It is also important to realize that the USITC projections rule out the possibility that some of the countries in the agreement may deliberately keep down the value of their currency to increase their trade surpluses, as they have done in the past. The TPP would reduce the ability of the United States to take measures to punish such behavior.

It is also worth noting that contrary to what Samuelson implies, the U.S. is generally helped, not hurt, when our trading partners remove barriers between them. If an EU-Japan trade deal actually leads to stronger growth for both sides, these countries will be better trading partners for the United States. (It is possible that the increased protectionism in the pact, associated with longer and stronger patent and copyright and related protections may do more to slow growth than the liberalization measures do to increase it.)

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The NYT is again spreading the absurd myth that Paul Ryan and other Republicans want a free market in health care. While it is very helpful to the Republicans to imply that they are trying to advance some grand principle, as opposed to just giving money to rich people, it is a lie on a par with climate denialism.

There are no government-granted patent monopolies in a free market. As a result of these government granted monopolies, we will pay more than $440 billion for prescription drugs this year. These drugs would likely cost less than $80 billion in a free market. The difference of more than $360 billion a year is a bit less than 2 percent of GDP more than seven times as much money as is at stake in the Republicans proposed Medicaid cuts. (Those cuts cover a decade, this is a single year figure.)

The same story applies to medical equipment. MRIs are cheap without patent protection.

It is possible to argue for the merits of government granted monopolies (I argue against them in chapter 5 of Rigged [it's free]), but it is not possible to deny that these monopolies are a government policy, not the free market. Paul Ryan has never indicated any opposition to government granted patent monopolies.

Similarly, we pay our doctors twice as much as their counterparts in other rich countries, costing us more than $80 billion a year in higher health care costs. This is due to the protectionist barriers enjoyed by our doctors, which protect them from both foreign and domestic competition. (This is covered in chapter 7 of Rigged.) Paul Ryan has never indicated a desire to remove the protectionist barriers that allow many doctors to reach the top one percent of income earners.

The government also privileges insurance contracts in many ways compared with other contracts. For example, with insurance contracts not disclosing relevant information can often void the contract. By contrast, with most contracts, the parties to the contract are responsible for learning relevant information themselves. Ryan has not indicated any desire to reverse this privileged position for insurance contracts.

It is very generous of the NYT to pretend that the Republicans are motivated by some sort of principle in their efforts to repeal the ACA, but the claim is absurd on its face. It does not deserve to be treated seriously, the repeal is about giving more money to rich people, end of story.

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If the Fed is really targeting 2.0 percent inflation, it is hard to understand why it would be considering further interest rate hikes. Inflation has been slowing in recent months, to a rate of just 1.4 percent in the core personal consumption expenditure deflator. The June jobs report gave more evidence that wage growth is slowing as well. The figure below shows the annualized rate of inflation taking the average hourly wage for the last three months (April, May, and June), compared with the average for the prior three months (January, February, and March).

Book2 15921 image001

Source: Bureau of Labor Statistics.

As can be seen, there was some acceleration in wage growth by this measure in the first half of 2016, with a peak of just over 3.0 percent in May. Since then the general direction has been downward. The most recent data puts the annualized rate of wage growth by this measure at just over 2.0 percent. We all know the story that wage growth is supposed to accelerate in a tight labor market, but maybe the data are trying to tell us that the labor market just isn't very tight. 

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Yes, that is what he said. You can read about it in the NYT. The annualized rate of wage growth in the last three months compared with the prior three months was just 2.0 percent. So, if there is a problem with getting qualified workers it seems to be primarily in the human resources department.

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In order to reduce speculation in its housing market, the city of Vancouver imposed a vacant property tax. People would be assessed an additional tax if a house or apartment was left vacant for a long period of time. (Yes, this is one of my pet ideas, so it makes my day to see Vancouver moving ahead with the vacancy tax.)

In addition to reducing speculation it might be expected that the tax would reduce rents by making more units available. But CBC says it ain't so, there will be more supply but no change in prices. Interesting how things work up north.

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