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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I see from the Twitterverse that this NYT column by Robert Leonard, on why rural voters don't like Democrats, touched some nerves. The main complaint stems from Leonard's comment that rural voters see themselves as subsidizing the big cities:

"In this view, blue counties are where most of our tax dollars are spent, and that’s where all of our laws are written and passed. To rural Americans, sometimes it seems our taxes mostly go to making city residents live better. We recognize that the truth is more complex, particularly when it comes to social programs, but it’s the perception that matters — certainly to the way most people vote."

The gist of the angry Twitter comments was effectively "who cares about the hicks' perceptions, the reality is that the tax subsidies go the other way."

Well, this might a good teaching moment. Only the ignorati would focus exclusively on tax and spending flows. As everyone who has read the good book (Rigged — it's free) knows, the government directs income flows in a wide variety of ways that go beyond normal tax and spending flows.

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Yet again the Washington Post tries to tell readers that trade has not been a major factor in the loss of manufacturing jobs in this century. It concluded an interesting piece on Ford's decision to cancel plans for a plant in Mexico by telling readers:

"The president-elect has argued that trade policy has quashed American livelihoods, encouraging businesses to seek cheaper labor in other countries. He has criticized Ford, General Motors and Carrier on Twitter for shuttling work south of the border.

"A study last year from the Center for Business and Economic Research at Ball State University, a school in the manufacturing heartland, tells a different story. Co-author Michael Hicks, an economics professor, found that advances in technology caused far more job loss. That’s because automation has enabled factories to produce more goods with fewer people."

Actually, automation is not new. It's called "productivity growth" and has been going on for centuries, often much faster than it is today. As we can see, manufacturing employment remained roughly even, with cyclical ups and downs, from 1970 to 2000. It then plunged as the trade deficit exploded to almost 6.0 percent of GDP in 2005 and 2006 ($1.1 trillion in today's economy).

Manufacturing Employment

manu empl

Source: Bureau of Labor Statistics.

The basic story is that manufacturing employment was declining as a share of total employment through this whole period and undoubtedly would have continued to do so regardless of what happened with trade. However, the sharp plunge in employment that we saw in the years 2000 to 2007 (pre-crash) was due to the trade deficit.

It is remarkable that the Washington Post feels so much need to deny this simple fact. It is in the same vein as its refusal to correct its 2007 editorial claiming that NAFTA had led Mexico's GDP to quadruple between 1987 and 2007. The actual number is 83 percent according to I.M.F data. A serious newspaper would correct such an egregious error.

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This fact was implicit in a NYT piece that discussed the extent to which U.S. medical schools are expanding enrollments. The piece notes that the number of doctors in the United States is limited by the requirement that they complete a U.S. residency program. It doesn't give any indication that this protectionist restriction might be removed or weakened in the years ahead.

As a result of this protectionism, U.S. doctors earn on average more than twice as much as their counterparts in Germany, France, and other wealthy countries. This costs the country close to $100 billion a year in higher health care costs. Because of the political power of doctors, there is little public debate over this protectionism and news outlets like the NYT rarely even mention it.

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Yes, I know Peter Peterson is a major source of employment in Washington and that the Washington Post editors and many pundits would have to look for substantive issues to talk about if they couldn't whine about the debt, but really it is time for these folks to grow up. The immediate provocation here is Steven Rattner's NYT column giving "2016 in Charts."

Most of the charts are actually quite interesting and useful, but then he ends the piece with a tirade about the prospects for the national debt under a Trump administration. Rattner warns:

"These huge tax giveaways — along with Mr. Trump’s promises to increase infrastructure spending and not touch Social Security and Medicare — would blow up the deficit and add $4 trillion to the national debt over the next 10 years over and above current projections."

Just to be clear, there is no reason to be giving more money to Donald Trump's billionaire friends as he proposes, but the argument is not that it will "blow up" the deficit and add to the debt. The argument is that this money could be much better used educating our children, improving our infrastructure, and making health care affordable, among other things.

The debt stuff is just silliness that we really need to get over. The problem of an actually excessive debt would show itself in high interest rates and high inflation rates. Have you checked those measures lately? Long-term interest rates are still way below their levels from the late 1990s when the government was running surpluses. And inflation remains persistently below the Fed's 2.0 percent target and in recent months has edged downward. (And, for those keeping score at home, the government's ratio of interest payments to GDP is near a post-World War II low.)

Furthermore, the whole focus on the debt encourages sloppy thinking that has no place in serious policy discussions. The government makes obligations for us all the time that don't take the form of explicit debt. Donald Trump wants to have private companies spend a trillion dollars building infrastructure that they will then recoup in tolls. How do these tolls differ from taxes? So we would be doing bad things to our kids if we financed infrastructure with debt, but then taxed to repay the bonds, but if private companies charge the same amount (most likely much more) in tolls, everything is cool? 

To take a much more important example, grants of patent and copyright monopolies are ways in which the government finances innovation and creative work. We pay $430 billion a year for prescription drugs that would likely cost around $60 billion in a free market without patents and related protection. (Yes, you can read more in my [free] book, Rigged.) If the government imposed a tax of $370 billion a year on drugs being sold in a free market the deficit hawks would be yelling and screaming about high taxes, but when we give drug companies a legal monopoly so that they can add this amount to the price of drugs it's no big deal?

Okay, this is just silliness. We need discussions of the economy that are serious. When people scream about debt and deficits they are not being serious. The national debt is not a real measure of anything and folks should know that even if the "experts" don't.

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Folks undoubtedly heard about Donald Trump's boast about getting Ford to keep jobs in the U.S. rather than investing in a new plant in Mexico. The decision seems to have more to do with Ford's product mix than anything that Trump did with his boast and bully strategy, but whatever. We're getting used to a guy that would take credit for the sun rising and gives us jobs that you can count on your fingers. (To be clear, I think it would be great if Donald Trump pushes policies that bring (or save) good-paying manufacturing jobs to the United States, but we're interested in policies that affect millions of jobs, not press shows with hundreds of jobs.)

Anyhow, one aspect of these Ford jobs that has not gotten sufficient attention is that the only reason they exist is because of President Obama's policy on combating global warming. As the NYT article points out, the plant in Michigan where production is being increased produces hybrid and electric cars. These cars were given subsidies as part of President Obama's efforts to curb greenhouse gas emissions. This was part of Obama's strategy to combat global warming.

As folks may recall, Donald Trump has said that global warming is a hoax invented by the Chinese. It turns out that President Obama's response to this hoax is responsible for creating the jobs that Trump claims to have saved. 

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Alright, that is not entirely fair, but when the NYT told readers that Germany's unemployment rate is 6.0 percent it seriously misled readers. The issue is that this figure refers to Germany's unemployment rate as calculated by Germany's government. This measure counts workers who are employed part-time, but want full-time jobs, as being unemployed. By contrast, the standard measure of the unemployment rate in the United States counts these workers as being employed.

This would be reasonable if the German government measure was the only one available, but it isn't. The OECD calculates a harmonized unemployment rate that is essentially the same as the unemployment rate generally used for the United States. By this measure Germany's unemployment rate is just 4.0 percent. 

The NYT can be partially forgiven since this was a Reuters story that it made available on its web site. (I don't know if it ran in the print edition.) Still, it would not be hard to add a sentence either explaining the difference or alternatively including the OECD measure.

In this same vein, and it's a new year, let me also harp on the practice of printing other country's growth rates as quarterly figures. While the rate of GDP growth is always expressed as an annual rate in the United States, most other countries express their growth as a quarterly rate. Typically this raises the U.S. growth rate by a factor of four. For example, a 0.5 percent quarterly growth rate translates into a 2.0 percent annual rate. (To be precise, the growth rate should be taken to the fourth power. For low growth rates this will typically be the same as multiplying by four.)

Anyhow, articles often appear in the NYT and elsewhere that just print the growth rate as a quarterly rate, frequently without even pointing out that it is a quarterly rate. This gives readers an inaccurate impression of the growth rate in other countries.

It really should not be too much to expect a newspaper to convert the growth rates to annualized rates. After all, the reporters are more likely to have the time to do this than the readers. And, this is supposed to be about providing information to readers, right?

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The NYT had an editorial arguing that major corporations are helping Donald Trump lie about job creation in order to get favors from his administration. The main example is the Japanese investment firm Soft Bank, which allowed Trump to get away with taking credit for investment decisions which had been announced in October, before Donald Trump was elected. It argues that Soft Bank is hoping that Trump will allow a merger between its Sprint subsidiary and T-Mobile. This merger had been opposed by the Obama administration because it would reduce competition in the cell phone industry. It would likely also result in the loss of a substantial number of jobs.

It is worth noting that such phony claims of job creation can only be effective for Trump if the media allow it. If the headline of the news stories was something to the effect of "Trump again makes phony job claim," with the article carefully explaining that Trump had nothing to with creating any jobs, it is likely that Trump would give up on the tactic. Of course this would require the media to engage in objective reporting even if it ends up being very critical of a particular politician.

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Gretchen Morgenson had an interesting piece on the New York Teamsters pension fund, which appears likely to impose a substantial benefit cut on current and future retirees as a result of a large funding shortfall. While there are many causes for the shortfall, most importantly a declining number of active workers contributing to the fund, the situation has been made worse by the high fees paid to private equity companies.

It appears that the fund invested heavily in private equity in recent years in the hope of raising its returns. The investments have not generally paid off, with private equity funds doing no better than comparable market indexes. However, the pensions had to pay much more in fees to the private equity fund managers than they would have paid had they invested in a stock index. It is probably worth mentioning that many of the most highly paid people in the country are private equity fund managers.

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Breaking the taxi industry cartel's and promoting Uber has been somewhat of a cause célèbre among economists in recent years. Any card carrying economist can give you the two minute tirade on the evils of the taxi cartel and the benefits of Uber. (I can too, but the argument should be for modernized regulation, not Uber gets to do whatever it wants because it's Uber, see pieces here, here, and here.)

What is striking is that the enthusiasm for the virtues of competition seems to disappear when we switch the topic from the taxi cartel to the doctors' cartel. Doctors actually have been far more effective than taxi companies in limiting competition. Doctors largely get to set standards of care, which not surprisingly requires twice as high a percentage of highly paid specialists as in other wealthy countries. They also restrict the number of doctors with a wonderfully protectionist rule that prohibits doctors from practicing in the United States unless they have completed a U.S. residency program. This means that even well-established doctors in places like Germany, France, and Canada would face arrest if they attempted to practice medicine in the United States.

As a result of this cartel, doctors in the U.S. earn on average more than $250,000 a year, putting the average doctor not far below the one percent threshold, even assuming no other family income. This is roughly twice the pay as the average doctor earns in other wealthy countries.

It is striking that the doctors' cartel gets so much less attention from economists than the taxi cartel. After all, we spend close to $250 billion a year on doctors compared to $6 billion a year on taxis. I could suggest that the lack of interest is due to the fact that many economists have parents, siblings and/or children who are doctors, but I wouldn't be that rude.

Anyhow, there are measures that can be taken at both the national and state level to break the cartel if economists ever take an interest in free trade. At the national level the obvious step would be to establish an international certification system so that doctors trained in other countries could establish their competency and then practice in the United States just like a doctor born and trained here. (Save the whine. We can establish a system whereby we repatriate money to developing countries for the doctors they train who then practice in the United States. As it stands, they get zero money for the doctors that leave the country, so this system would almost certainly be a net improvement for them. Yes, this is discussed in Rigged.)

Since protectionists dominate trade policy (I mean up until now, not just since the election of Donald Trump), we can also look to measures at the state level. It seems that several states are considering policies that would allow doctors who do not complete a residency program to practice under the supervision of another doctor. This is a great first step as is expanding the scope of practice for nurse practitioners and other less highly paid health care professionals. 

Developments in technology should allow health care professionals with much less training than doctors to make diagnoses as accurately or more accurately than the best doctors. The same is true with robotics, which is likely to eventually outperform even the best surgeons. These technologies will offer both huge savings and better care, if we don't allow the doctors' cartel to maintain its lock on the practice of medicine.    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Core CPI, Minus Shelter

CPI shelter

Source: Bureau of Labor Statistics.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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