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Article Artículo

NYT Pulls Out the Stops in Pushing NAFTA

The NYT is bending over backwards to promote the protectionist pattern of trade policies of recent presidents. Yes folks, it is protectionist even if they call them "free trade" deals. Patent and copyright protection are protectionism, even if your friends benefit from them. And when we spend an extra $100 billion a year on doctors, compared with pay in Canada and Western Europe, because doctors who don't complete a U.S. residency program are not allowed to practice in the United States, that is protectionism.

So the story is what happens if we try to bring back some of the barriers to trade in manufacturing, the area where our political leaders have gone farthest to reduce barriers. In discussing NAFTA the NYT goes to great lengths to tell us any rollback would be a disaster. It explains how our industry has become closely integrated with Mexico's then warns:

"What we do know is that even relatively small tariffs can stand in the way of the kind of supply networks on which many modern industries are based. With these networks, goods can cross back and forth across national borders multiple times as part of the pipeline that leads to a finished automobile or a computer or even a side of beef. It’s not that companies couldn’t adjust; over time they could. It’s that the networks evolved this way for a reason, and readjusting would come at a considerable cost."

Really? Even small tariffs would upset everything. Let's see, suppose the U.S. imposed a five percent tariff on everything imported from Mexico. As a first approximation, everything we bought from Mexico would cost five percent more than it did previously. In reality, this price increase would not be passed on in full, but this is a good starting point. The NYT tells us that this would be really bad news.

Okay, suppose the dollar falls by five percent against the Mexican peso. As a first approximation, everything we bought from Mexico would cost five percent more than it did previously. In reality, this price increase would not be passed on in full, but this is a good starting point.

CEPR / October 04, 2016

Article Artículo

Affordable Care Act

Health and Social Programs

United States

The Ranks of the Uninsured Have Declined More Under Democratic Governors than Under Republican Ones

Since the main provisions of the Affordable Care Act (ACA) were implemented in 2014, the uninsured rate has declined precipitously. This was on full display in the Census Bureau’s 2015 health insurance report, which showed that the share of Americans lacking coverage declined 5.1 percentage points between 2013 and 2015. According to the data from the American Community Survey (ACS), the share of the population without insurance fell from 14.5 to 9.4 percent (pp. 24-25).

Due to its large sample size, the ACS allows us to look at the change in the uninsured rate at the state level. And when looking at the state-by-state data, a clear pattern emerges: states with Democratic governors have seen far more significant gains in coverage than states with Republican ones.

CEPR and Nicolas Buffie / September 30, 2016

Article Artículo

Economists Keep Getting It Wrong Because the Media Cover Up Their Mistakes

Most workers suffer serious consequences when they mess up on their jobs. Custodians get fired if the toilet is not clean. Dishwashers lose their job when they break too many dishes, but not all workers are held accountable for the quality of their work.

At the top of the list of people who need not be competent to keep their job are economists. Unlike workers in most occupations, when large groups of economists mess up they can count on the media covering up their mistakes and insisting it was just impossible to understand what was going on.

This is first and foremost the story of the housing bubble. While it was easy to recognize that the United States and many other countries were seeing massive bubbles that were driving their economies, which meant that their collapse would lead to major recessions, the vast majority of economists insisted there was nothing to worry about.

The bubbles did burst, leading to a financial crisis, double-digit unemployment in many countries, and costing the world tens of trillions of dollars of lost output. The media excused this extraordinary failure by insisting that no one saw the bubble and that it was impossible to prevent this sort of economic and human disaster. Almost no economists suffered any consequences to their career as a result of this failure. The "experts" who determined policy in the years after the crash were the same people who completely missed seeing the crash coming.

We are now seeing the same story with trade. The NYT has a major magazine article on the impact of trade on the living standards of workers in the United States and other wealthy countries. The subhead tells readers:

"Trade is under attack in much of the world, because economists failed to anticipate the accompanying joblessness, and governments failed to help."

Of course many economists did not anticipate the negative impact of trade, but of course many of us did. The negative impact was entirely predictable and predicted. (Here are a few from CEPR, there are many more books and papers from my friends at the Economic Policy Institute.) The argument is straightforward: trade policy has been designed to put manufacturing workers in direct competition with low paid workers in the developing world. This costs jobs and puts downward pressure on the wages of these workers. It also puts downward pressure on the wages of less-educated workers more generally, as displaced manufacturing workers seek jobs in retail and other sectors. Stagnating wages and increasing inequality are the predicted result of this pattern of trade, not a surprising outcome.

CEPR / September 29, 2016

Article Artículo

Health and Social Programs

United States

Are Disabled Workers a Growing Burden? Not Really

As you may have heard, spending on Social Security Disability Insurance has been rising over the past 25 years. Many major news outlets have portrayed this increase as a looming disaster with headlines such as the following:

“It’s Time to Reform Our Bankrupt Disability Insurance,” National Review, September 2015

“Social Security Disability Insurance Program Is Financially Unsustainable,” Mercatus Center, September 2015

“With Social Security Disability Fund Going Broke by 2016, Congress Set for Partisan, Election-Year Showdown,” Fox News, August 2015

“Another Looming Crisis: Social Security Disability Insurance,” The Hill, July 2015

“Social Security Disability Insurance Is Failing,” Senate Republic Policy Committee, March 2015

“Averting the Disability-Insurance Meltdown,” Wall Street Journal, February 2015

“7 Facts About America’s Disability Check Explosion,” Breitbart, January 2015

“SSA: Disability Recipients Soar, Funding Nearly Depleted Under Obama,” Newsmax, December 2013

“Social Security Disability Claims Out-Of-Control,” NewsBlaze, October 2013

“The Rising Cost of Social Security Disability Insurance,” Cato Institute, August 2013

“Social Security Disability Insurance Costs Are Exploding,” Washington Examiner, August 2013

“Social Security Disability Fund to Go Broke in 2016,” Washington Examiner, July 2013

“Disability Explosion Puts Social Security in Danger,” Investor’s Business Daily, June 2013

“Disability Insurance, Out of Control,” Chicago Tribune, April 2013

“Disability Insurance: America’s $124 Billion Secret Welfare Program,” The Atlantic, March 2013

“Unfit for Work: The Startling Rise of Disability in America,” Planet Money (National Public Radio), March 2013

“Social Security Disability Program Reveals Budget Quagmire,” Washington Post, February 2012

“Social Security Disability Benefits Unsustainable,” Cato Institute, November 2010

“America’s Hidden Welfare Program: Social Security’s Disability Insurance Is Expensive, Destructive, and Out of Control,” Slate, September 2010

Given this sort of reporting, a normal reader might think that assistance to disabled workers has been “spiraling out of control.” But that just isn’t true.

CEPR and Nicolas Buffie / September 28, 2016

Article Artículo

NYT Editorial In News Section for TPP Short on Substance

When the issue is trade deals, like the Trans-Pacific Partnership (TPP), the New York Times throws out its usual journalistic standards to push its pro-trade deal agenda. Therefore it is not surprising to see a story in the news section that was essentially a misleading advertisement for these trade deals.  

The headline tells readers that Donald Trump's comments on trade in the Monday night debate lacked accuracy. The second paragraph adds:

"His aggressiveness may have been offset somewhat by demerits on substance."

These comments could well describe this NYT piece.

For example, it ostensibly indicts Trump with the comment:

"His [Trump's] first words of the night were the claim that “our jobs are fleeing the country,” though nearly 15 million new jobs have been created since the economic recovery began."

It is not clear what the NYT thinks it is telling readers with this comment. The economy grows and creates jobs, sort of like the tree in my backyard grows every year. The issue is the rate of growth and job creation. While the economy has recovered from the lows of the recession, employment rates of prime age workers (ages 25–54) are still down by almost 2.0 percentage points from the pre-recession level and almost 4.0 percentage points from 2000 peaks. There is much research showing that trade has played a role in this drop in employment.

The NYT piece continues:

"He [Trump] singled out Ford for sending thousands of jobs to Mexico to build small cars and worsening manufacturing job losses in Michigan and Ohio, but the company’s chief executive has said 'zero' American workers would be cut. Those states each gained more than 75,000 jobs in just the last year."

It is not surprising that Ford's CEO would say that shifting production to Mexico would not cost U.S. jobs. It is likely he would make this claim whether or not it is true. Furthermore, his actual statement is that Ford is not cutting U.S. jobs. If the jobs being created in Mexico would otherwise be created in the United States, then the switch is costing U.S. jobs. The fact that Michigan and Ohio added 75,000 jobs last year has as much to do with this issue as the winner of last night's Yankees' game.

CEPR / September 28, 2016