That is not quite what he said, but it is pretty much in the same spirit as what Buttigieg said about trade and jobs, according to the Washington Post. The post told readers:
“Buttigieg has said six times as many jobs were lost because of automation as trade from 2000 to 2010.”
This is more or less right in the same way that Nebraska will get far more rain over the course of 2019 than the rain that caused the recent flooding. And, the assertion makes about as much sense in the context of the floods as in the context of jobs lost to imports.
Productivity growth (the term that economists use for Buttigieg’s “automation”) averages roughly 2.0 percent annually. This means that, in a workforce of 150 million people, we lose roughly 3 million jobs a year to productivity growth. Since the workforce averaged roughly 134 million in the last decade, we would have lost roughly 27 million jobs due to productivity growth.
By comparison, we lost 3.4 million manufacturing jobs from 2000 to 2007 (before the crash) as the trade deficit exploded. So, Buttigieg can accurately say that we lost more than six times as many jobs due to productivity growth than due to trade. And, this doesn’t change by one iota the fact that the huge run-up in the trade deficit devastated millions of families and whole communities in places like Ohio, Michigan, Pennsylvania, and Indiana.
It is also striking the Buttigieg is worried about automation proceeding too quickly. Pretty much the whole economics profession has the opposite concern, that productivity growth is too slow. Productivity growth has averaged just 1.3 percent annually over the last decade. In fact, the NYT just ran a column telling readers that we should expect that productivity growth will remain slow forever more.
In principle, productivity growth is associated with rising real wages and shorter work hours. It is striking that Buttigieg is apparently concerned about something that is so directly at odds with both the data and standard economics.
That is not quite what he said, but it is pretty much in the same spirit as what Buttigieg said about trade and jobs, according to the Washington Post. The post told readers:
“Buttigieg has said six times as many jobs were lost because of automation as trade from 2000 to 2010.”
This is more or less right in the same way that Nebraska will get far more rain over the course of 2019 than the rain that caused the recent flooding. And, the assertion makes about as much sense in the context of the floods as in the context of jobs lost to imports.
Productivity growth (the term that economists use for Buttigieg’s “automation”) averages roughly 2.0 percent annually. This means that, in a workforce of 150 million people, we lose roughly 3 million jobs a year to productivity growth. Since the workforce averaged roughly 134 million in the last decade, we would have lost roughly 27 million jobs due to productivity growth.
By comparison, we lost 3.4 million manufacturing jobs from 2000 to 2007 (before the crash) as the trade deficit exploded. So, Buttigieg can accurately say that we lost more than six times as many jobs due to productivity growth than due to trade. And, this doesn’t change by one iota the fact that the huge run-up in the trade deficit devastated millions of families and whole communities in places like Ohio, Michigan, Pennsylvania, and Indiana.
It is also striking the Buttigieg is worried about automation proceeding too quickly. Pretty much the whole economics profession has the opposite concern, that productivity growth is too slow. Productivity growth has averaged just 1.3 percent annually over the last decade. In fact, the NYT just ran a column telling readers that we should expect that productivity growth will remain slow forever more.
In principle, productivity growth is associated with rising real wages and shorter work hours. It is striking that Buttigieg is apparently concerned about something that is so directly at odds with both the data and standard economics.
Read More Leer más Join the discussion Participa en la discusión
This would be a useful follow up to an NYT article telling readers who stands to make lots of money if these companies command high prices in IPOs, as seems likely to be the case. Some of these companies, like Uber, have never made a profit, and none of them make profits that could come anywhere close to justifying their IPO price.
Furthermore, at least in the case of Uber and Lyft, their business model seems to depend on breaking the law. Specifically, they hope to save money by having their drivers classified as independent contractors, which gets them out of paying for unemployment insurance, Social Security, and other taxes and responsibilities.
If we assume that these companies either don’t become profitable or just earn small profits, then at some point their stock prices are likely to come crashing down to earth. (Think of the Internet companies of the late 1990s.) In that case, the people who buy the stock after the IPOs will be big losers. This is likely to include many pension funds, many workers with 401(k)s invested in the stock market, and a few suckers buying individual stocks, who think that these companies will be the next Apple.
Hyping companies like Uber in the business press is a great way to transfer income upward. It would be good if it stopped doing it.
This would be a useful follow up to an NYT article telling readers who stands to make lots of money if these companies command high prices in IPOs, as seems likely to be the case. Some of these companies, like Uber, have never made a profit, and none of them make profits that could come anywhere close to justifying their IPO price.
Furthermore, at least in the case of Uber and Lyft, their business model seems to depend on breaking the law. Specifically, they hope to save money by having their drivers classified as independent contractors, which gets them out of paying for unemployment insurance, Social Security, and other taxes and responsibilities.
If we assume that these companies either don’t become profitable or just earn small profits, then at some point their stock prices are likely to come crashing down to earth. (Think of the Internet companies of the late 1990s.) In that case, the people who buy the stock after the IPOs will be big losers. This is likely to include many pension funds, many workers with 401(k)s invested in the stock market, and a few suckers buying individual stocks, who think that these companies will be the next Apple.
Hyping companies like Uber in the business press is a great way to transfer income upward. It would be good if it stopped doing it.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
The NYT had a good piece on efforts to have states classify gig workers, like Uber drivers, as independent contractors. The piece describes how Tusk Holdings, a lobbying firm, has been circumventing state legislatures and trying to get state agencies to make the determination that gig workers are contractors.
When explaining the problem with the independent contractor classification, the piece understated the anti-trust issue involved. It told readers:
“Uber and Lyft also determine pay rates for drivers, something independent contractors typically decide.”
It is not just a practice that independent contractors decide their own pay rates, it is the law. If they combined to set pay scales they would likely be violating anti-trust laws which prevent such collusion. If we accept their claim that their drivers are independent contractors, Uber, Lyft, and other gig economy employers are effectively engineering the sort of collusion that is prohibited by anti-trust law. Uber currently is facing lawsuits for exactly this reason.
The NYT had a good piece on efforts to have states classify gig workers, like Uber drivers, as independent contractors. The piece describes how Tusk Holdings, a lobbying firm, has been circumventing state legislatures and trying to get state agencies to make the determination that gig workers are contractors.
When explaining the problem with the independent contractor classification, the piece understated the anti-trust issue involved. It told readers:
“Uber and Lyft also determine pay rates for drivers, something independent contractors typically decide.”
It is not just a practice that independent contractors decide their own pay rates, it is the law. If they combined to set pay scales they would likely be violating anti-trust laws which prevent such collusion. If we accept their claim that their drivers are independent contractors, Uber, Lyft, and other gig economy employers are effectively engineering the sort of collusion that is prohibited by anti-trust law. Uber currently is facing lawsuits for exactly this reason.
Read More Leer más Join the discussion Participa en la discusión
Fred Hiatt, the editorial page editor of the Washington Post, used his column today to say that people on the left had developed Trumpian ways of viewing the world. For example, he said they value “the simple over the complex,” using the example of people pushing the universal Medicare system in Canada as a solution to US health care problems. He warns about choosing “scapegoats over solutions,” telling readers, “if your candidate starts telling you that everything would be fine if we just went after billionaires, or big banks, or big tech, or…be nervous.” And he also warns of “winner-take-all politics over compromise.”
Hiatt, of course, works for Jeff Bezos, the world’s richest person, who owns the Washington Post. While it is unlikely that such a billionaire (or even hundred millionaires) exists, imagine one ran a newspaper where people got paid to ridicule centrists like Hiatt. There certainly is much material in Hiatt’s column and which appears regularly in The Washington Post.
Starting with Hiatt’s last point, if a Democratic candidate is running on a platform where they claimed they would work with Senate majority leader Mitch McConnell, that person is dangerously out of touch with reality. There was a Democratic presidential candidate who tried this, named Barack Obama.
When he proposed his stimulus package he openly said that it was a starting position. He asked for Republican input. He said that he wanted the package to pass the Senate with 80 votes. After much work, and compromise, he got three Republican votes in the Senate, one of whom subsequently switched parties to become a Democrat. He got zero Republican votes in the House.
Obama tried the same approach with the Affordable Care Act, delaying the vote for many months as he allowed Republicans to debate and amend the bill. This got zero Republican votes in either the House or Senate. (One House Republican cast his vote in favor after the bill already had a majority.)
Perhaps Hiatt is too young to remember this history.
In terms of favoring simple over complex, how about centrists who insist that we need lower deficits or balanced budgets. These folks have literally cost our children tens of trillions of dollars of lost output, meaning the economy will be permanently smaller, because they blocked larger budget deficits that could have sped the recovery from the Great Recession. It’s much simpler to say that smaller deficits and debt are good, just like a family budget, than to deal with how the economy actually works.
We could also point out how people like Hiatt never discuss government-granted patent and copyright monopolies as burdens the government imposes on the public. These monopolies are ways in which the government pays for things it wants done (e.g. developing new drugs or developing software) without directly spending money. They are equivalent to privately imposed taxes. This burden comes to around $370 billion a year in the case of prescription drugs and perhaps over $1 trillion annually taken altogether.
In terms of scapegoating, we can point to the centrists who repeatedly have told workers that the problem for most workers is that they don’t have the right skills, not policies like trade or a weak economy. In spite of great efforts, the data just won’t support the centrists’ efforts to blame workers for the upward redistribution of the last four decades.
Yes, there are plenty of grounds for ridiculing the center as Trumpian, but rich people don’t pay for that sort of thing. So, enjoy Fred Hiatt’s trashing of the left, that’s what Jeff Bezos pays for.
Fred Hiatt, the editorial page editor of the Washington Post, used his column today to say that people on the left had developed Trumpian ways of viewing the world. For example, he said they value “the simple over the complex,” using the example of people pushing the universal Medicare system in Canada as a solution to US health care problems. He warns about choosing “scapegoats over solutions,” telling readers, “if your candidate starts telling you that everything would be fine if we just went after billionaires, or big banks, or big tech, or…be nervous.” And he also warns of “winner-take-all politics over compromise.”
Hiatt, of course, works for Jeff Bezos, the world’s richest person, who owns the Washington Post. While it is unlikely that such a billionaire (or even hundred millionaires) exists, imagine one ran a newspaper where people got paid to ridicule centrists like Hiatt. There certainly is much material in Hiatt’s column and which appears regularly in The Washington Post.
Starting with Hiatt’s last point, if a Democratic candidate is running on a platform where they claimed they would work with Senate majority leader Mitch McConnell, that person is dangerously out of touch with reality. There was a Democratic presidential candidate who tried this, named Barack Obama.
When he proposed his stimulus package he openly said that it was a starting position. He asked for Republican input. He said that he wanted the package to pass the Senate with 80 votes. After much work, and compromise, he got three Republican votes in the Senate, one of whom subsequently switched parties to become a Democrat. He got zero Republican votes in the House.
Obama tried the same approach with the Affordable Care Act, delaying the vote for many months as he allowed Republicans to debate and amend the bill. This got zero Republican votes in either the House or Senate. (One House Republican cast his vote in favor after the bill already had a majority.)
Perhaps Hiatt is too young to remember this history.
In terms of favoring simple over complex, how about centrists who insist that we need lower deficits or balanced budgets. These folks have literally cost our children tens of trillions of dollars of lost output, meaning the economy will be permanently smaller, because they blocked larger budget deficits that could have sped the recovery from the Great Recession. It’s much simpler to say that smaller deficits and debt are good, just like a family budget, than to deal with how the economy actually works.
We could also point out how people like Hiatt never discuss government-granted patent and copyright monopolies as burdens the government imposes on the public. These monopolies are ways in which the government pays for things it wants done (e.g. developing new drugs or developing software) without directly spending money. They are equivalent to privately imposed taxes. This burden comes to around $370 billion a year in the case of prescription drugs and perhaps over $1 trillion annually taken altogether.
In terms of scapegoating, we can point to the centrists who repeatedly have told workers that the problem for most workers is that they don’t have the right skills, not policies like trade or a weak economy. In spite of great efforts, the data just won’t support the centrists’ efforts to blame workers for the upward redistribution of the last four decades.
Yes, there are plenty of grounds for ridiculing the center as Trumpian, but rich people don’t pay for that sort of thing. So, enjoy Fred Hiatt’s trashing of the left, that’s what Jeff Bezos pays for.
Read More Leer más Join the discussion Participa en la discusión
Just kidding, this is the Washington Post we’re talking about. An article about how the Midwest floods are jeopardizing the survival of many family farms never once mentioned climate change. While it is impossible to link any specific weather event to climate change, in the sense that we can’t know what the weather would look like had it not been for the rise in greenhouse gases (GHG) worldwide, we do know that climate change will lead to unusual weather patterns like the storms and flooding that hit the Midwest this month.
This would be useful background for those debating policy on global warming. While measures to reduce GHG will have serious costs, the cost of not doing anything will be many more destructive weather events like the Midwest floods. (These events are likely to be far more destructive in the developing world where governments are much less well-prepared to deal with the consequences.)
While the piece did highlight the negative impact that Donald Trump’s trade war has had on farmers, it never once mentioned the negative impact of the rise in the dollar over the last two years. There is a world price for corn, soybeans, and other commodities. If the dollar rises by 10 percent against the currencies of our trading partners, this means that our farmers will get 10 percent less in dollar terms for their crops. Since most input costs for farmers are in dollar terms, this is a serious hit to US farmers.
It is bizarre that the WaPo never mentioned this fact in this piece, and in fact, rarely measures the impact of the value of the dollar on US trade more generally. This is the sort of thing that any intro econ student should know. It is also important in current trade debates since currency values was a major issue that Trump promised to raise with China in his campaign, although it seems to have largely disappeared in his trade negotiations with China.
Just kidding, this is the Washington Post we’re talking about. An article about how the Midwest floods are jeopardizing the survival of many family farms never once mentioned climate change. While it is impossible to link any specific weather event to climate change, in the sense that we can’t know what the weather would look like had it not been for the rise in greenhouse gases (GHG) worldwide, we do know that climate change will lead to unusual weather patterns like the storms and flooding that hit the Midwest this month.
This would be useful background for those debating policy on global warming. While measures to reduce GHG will have serious costs, the cost of not doing anything will be many more destructive weather events like the Midwest floods. (These events are likely to be far more destructive in the developing world where governments are much less well-prepared to deal with the consequences.)
While the piece did highlight the negative impact that Donald Trump’s trade war has had on farmers, it never once mentioned the negative impact of the rise in the dollar over the last two years. There is a world price for corn, soybeans, and other commodities. If the dollar rises by 10 percent against the currencies of our trading partners, this means that our farmers will get 10 percent less in dollar terms for their crops. Since most input costs for farmers are in dollar terms, this is a serious hit to US farmers.
It is bizarre that the WaPo never mentioned this fact in this piece, and in fact, rarely measures the impact of the value of the dollar on US trade more generally. This is the sort of thing that any intro econ student should know. It is also important in current trade debates since currency values was a major issue that Trump promised to raise with China in his campaign, although it seems to have largely disappeared in his trade negotiations with China.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
We all know that Donald Trump insists that he is too ignorant to recognize the dangers to the planet of human-caused climate change. While the NYT has pretensions of being more interested in science and reality, it printed a column this morning by Steven Rattner that suggests the opposite.
Rattner says that we have to do something about climate change, but quickly dismisses the idea of a Green New Deal as far too expensive. His alternative is a carbon tax that would start at $43 a ton and then rise at the rate of 3 to 5 percent annually. As authority, he cites a letter signed by 3,300 economists supporting the tax. (I was one of these economists. I disagreed with the emphasis on the tax route, but felt it important to have a statement from economists across the political spectrum that emphasized the urgency of doing something on climate change.)
While a carbon tax should be an important part of a solution to global warming, the claims advanced by Rattner are literally absurd. His column included a graph that shows emissions falling by 20 percent in 2021 when the tax is first introduced. They continue to fall rapidly so that by 2035 in the 3 percent increase scenario emissions are down by 31 percent from the baseline and in the 5.0 percent scenario they are down by more than 37 percent.
The reason this is absurd is that the levels of tax proposed by Rattner are very modest and would have only a limited effect on emissions. According to Rattner, the $43 a ton tax would add 38.2 cents to the price of a gallon gas. By 2035, in the 3.0 percent tax rise scenario, this would be up to about 58 cents. In the 5 percent increase, it would be up to 76 cents.
The idea that this sort of modest rise in fossil fuel prices would have anything close to this large an effect on energy consumption is absurd on its face. Currently, gas prices in the U.S. are around $2.80 a gallon. They had been over $4.00 a gallon earlier in the decade. That higher price was not associated with massively lower consumption. Rattner’s tax doesn’t even get us back to this level by 2035.
His projections of emissions reductions are complete inventions that make Trump’s projections of tax cut-induced growth look conservative. It is outrageous that the NYT would print such a flagrantly inaccurate piece on such an important issue. A serious newspaper would immediately remove the column from its website and replace it with an apology/correction.
We all know that Donald Trump insists that he is too ignorant to recognize the dangers to the planet of human-caused climate change. While the NYT has pretensions of being more interested in science and reality, it printed a column this morning by Steven Rattner that suggests the opposite.
Rattner says that we have to do something about climate change, but quickly dismisses the idea of a Green New Deal as far too expensive. His alternative is a carbon tax that would start at $43 a ton and then rise at the rate of 3 to 5 percent annually. As authority, he cites a letter signed by 3,300 economists supporting the tax. (I was one of these economists. I disagreed with the emphasis on the tax route, but felt it important to have a statement from economists across the political spectrum that emphasized the urgency of doing something on climate change.)
While a carbon tax should be an important part of a solution to global warming, the claims advanced by Rattner are literally absurd. His column included a graph that shows emissions falling by 20 percent in 2021 when the tax is first introduced. They continue to fall rapidly so that by 2035 in the 3 percent increase scenario emissions are down by 31 percent from the baseline and in the 5.0 percent scenario they are down by more than 37 percent.
The reason this is absurd is that the levels of tax proposed by Rattner are very modest and would have only a limited effect on emissions. According to Rattner, the $43 a ton tax would add 38.2 cents to the price of a gallon gas. By 2035, in the 3.0 percent tax rise scenario, this would be up to about 58 cents. In the 5 percent increase, it would be up to 76 cents.
The idea that this sort of modest rise in fossil fuel prices would have anything close to this large an effect on energy consumption is absurd on its face. Currently, gas prices in the U.S. are around $2.80 a gallon. They had been over $4.00 a gallon earlier in the decade. That higher price was not associated with massively lower consumption. Rattner’s tax doesn’t even get us back to this level by 2035.
His projections of emissions reductions are complete inventions that make Trump’s projections of tax cut-induced growth look conservative. It is outrageous that the NYT would print such a flagrantly inaccurate piece on such an important issue. A serious newspaper would immediately remove the column from its website and replace it with an apology/correction.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
We know that the secret to being a successful capitalist in today’s America is to be able to cry effectively about the need for the government to save you from the market (see the Wall Street bailout from the financial crisis). We got more evidence of this basic truth in a New York Times piece on the status of the Trump administration’s trade negotiations with China.
The piece includes a reference to a report from the Trump administration that claims companies in the United States are losing at least $50 billion a year (0.25 percent of GDP) as a result of China not compensating them for their intellectual property. This is a very impressive figure since China’s total imports from the US were just $120 billion last year. (Even more impressive is a claim cited in the piece that our current tariffs on China would “reduce United States gross domestic product by at least $1 trillion within ten years.”)
Anyhow, the point of the piece is that the Trump administration is focusing in its negotiations on strengthening protections for US intellectual property claims, and in particular stopping Chinese policies that require technology transfers as a condition of investing in China.
It would have been worth mentioning that this effort by the Trump administration would make outsourcing jobs to China more attractive. (It is more profitable if you can locate operations in China without transferring technology than if you do have to transfer technology.) This is yet one more way in which the government promotes policies to redistribute income upward.
We know that the secret to being a successful capitalist in today’s America is to be able to cry effectively about the need for the government to save you from the market (see the Wall Street bailout from the financial crisis). We got more evidence of this basic truth in a New York Times piece on the status of the Trump administration’s trade negotiations with China.
The piece includes a reference to a report from the Trump administration that claims companies in the United States are losing at least $50 billion a year (0.25 percent of GDP) as a result of China not compensating them for their intellectual property. This is a very impressive figure since China’s total imports from the US were just $120 billion last year. (Even more impressive is a claim cited in the piece that our current tariffs on China would “reduce United States gross domestic product by at least $1 trillion within ten years.”)
Anyhow, the point of the piece is that the Trump administration is focusing in its negotiations on strengthening protections for US intellectual property claims, and in particular stopping Chinese policies that require technology transfers as a condition of investing in China.
It would have been worth mentioning that this effort by the Trump administration would make outsourcing jobs to China more attractive. (It is more profitable if you can locate operations in China without transferring technology than if you do have to transfer technology.) This is yet one more way in which the government promotes policies to redistribute income upward.
Read More Leer más Join the discussion Participa en la discusión
