The headline of the piece told readers “Wages are rising in Europe. But economists are puzzled.” Yes, well it does seem pretty puzzling, since it’s not clear what wage increases the piece is talking about.
Here is the key paragraph:
“When official data last month showed that hourly wages in the eurozone rose 2 percent in the first three months of 2018 — finally — the central bank got the signal it was looking for. It announced it would end its main stimulus measure at the end of the year. At its meeting on Thursday, the Governing Council is expected to reaffirm that plan.”
Okay, 2.0 percent growth in the average hourly wage over the last year. This appears to be nominal wages, which in the context of the eurozone’s 2.0 percent inflation, translates into exactly 0.0 percent real wage growth.
I double-checked this looking at the eurostat data and it did, in fact, show that average hourly wages in the eurozone had gone up 2.0 percent over the last year in nominal terms. In other words, zero increase in real wages. Furthermore, while the 2.0 percent year-over-year increase shown in the first quarter was up from 1.4 percent in the fourth quarter of 2017, the increase had been 1.8 percent in the second quarter of 2017 as well as the first quarter of 2016.
If we use the first quarter 2016 figure as a reference point, the rate of wage growth has accelerated 0.2 percentage points in two years or 0.1 percentage point annually. This merits a major NYT story? Yes, I am puzzled.
The headline of the piece told readers “Wages are rising in Europe. But economists are puzzled.” Yes, well it does seem pretty puzzling, since it’s not clear what wage increases the piece is talking about.
Here is the key paragraph:
“When official data last month showed that hourly wages in the eurozone rose 2 percent in the first three months of 2018 — finally — the central bank got the signal it was looking for. It announced it would end its main stimulus measure at the end of the year. At its meeting on Thursday, the Governing Council is expected to reaffirm that plan.”
Okay, 2.0 percent growth in the average hourly wage over the last year. This appears to be nominal wages, which in the context of the eurozone’s 2.0 percent inflation, translates into exactly 0.0 percent real wage growth.
I double-checked this looking at the eurostat data and it did, in fact, show that average hourly wages in the eurozone had gone up 2.0 percent over the last year in nominal terms. In other words, zero increase in real wages. Furthermore, while the 2.0 percent year-over-year increase shown in the first quarter was up from 1.4 percent in the fourth quarter of 2017, the increase had been 1.8 percent in the second quarter of 2017 as well as the first quarter of 2016.
If we use the first quarter 2016 figure as a reference point, the rate of wage growth has accelerated 0.2 percentage points in two years or 0.1 percentage point annually. This merits a major NYT story? Yes, I am puzzled.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
The Wall Street Journal may have gotten a bit carried away in telling readers that manufacturing had hit a “sweet spot” based on the Fed’s data on manufacturing production in June. The immediate story was the Federal Reserve Board’s report that manufacturing production had increased 0.8 percent in June following a 1.0 drop in May. The May decline was the result of a fire at a parts supplier for Ford.
While the bounce-back was encouraging, it still means that for the two-month period manufacturing output was down 0.2 percent. It seems hard to view this as positive news for the sector. Monthly data are erratic, so it is entirely possible that this decline will be offset by stronger growth in July and subsequent months, but it seems hard to view the June data as especially positive.
It is also worth noting that the longer term picture hardly suggests a boom for the sector. Here’s the picture going back to 2000. Output was growing much faster in the early years of the recovery. There were also periods in 2014 and 2015 when output increased at a similar pace. The near zero growth from 2000 to 2004 was due to the explosion of the trade deficit.
The Wall Street Journal may have gotten a bit carried away in telling readers that manufacturing had hit a “sweet spot” based on the Fed’s data on manufacturing production in June. The immediate story was the Federal Reserve Board’s report that manufacturing production had increased 0.8 percent in June following a 1.0 drop in May. The May decline was the result of a fire at a parts supplier for Ford.
While the bounce-back was encouraging, it still means that for the two-month period manufacturing output was down 0.2 percent. It seems hard to view this as positive news for the sector. Monthly data are erratic, so it is entirely possible that this decline will be offset by stronger growth in July and subsequent months, but it seems hard to view the June data as especially positive.
It is also worth noting that the longer term picture hardly suggests a boom for the sector. Here’s the picture going back to 2000. Output was growing much faster in the early years of the recovery. There were also periods in 2014 and 2015 when output increased at a similar pace. The near zero growth from 2000 to 2004 was due to the explosion of the trade deficit.
Read More Leer más Join the discussion Participa en la discusión
I’ll be moving in the next week, so I will likely not be blogging. Hopefully, I will be up and blogging by next Sunday.
I’ll be moving in the next week, so I will likely not be blogging. Hopefully, I will be up and blogging by next Sunday.
Read More Leer más Join the discussion Participa en la discusión
Carlos Lozada, the non-fiction book critic for the Washington Post, promised “an honest investigation” of whether truth can survive the Trump administration in the lead article in the paper’s Sunday Outlook section. He delivers considerably less.
Most importantly and incredibly, Lozada never considers the possibility that respect for traditional purveyors of “truth” has been badly weakened by the fact that they have failed to do so in many important ways in recent years. Furthermore, they have used their elite status (prized university positions and access to major media outlets) to deride those who challenged them as being unthinking illiterates.
This dynamic is most clear in the trade policy pursued by the United States over the last four decades. This policy had the predicted and actual effect of eliminating the jobs of millions of manufacturing workers and reducing the pay of tens of millions of workers with less than a college education. The people who suffered the negative effects of these policies were treated as stupid no-nothings and wrongly told that their suffering was due to automation or was an inevitable product of globalization.
These claims are what those of us still living in the world of truth know as “lies,” but you will never see anyone allowed to make these points in the Washington Post. After all, its readers can’t be allowed to see such thoughts. (Yes, I am once again plugging my [free] book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.)
This was far from the only major failure of the purveyors of truth. The economic crisis caused by the collapse of the housing bubble cost millions of workers their jobs and/or houses. While this collapse was 100 percent predictable for anyone with a basic knowledge of economics, with almost no exceptions, our elite economists failed to see it coming and ridiculed those who warned of the catastrophe.
Incredibly, there were no career consequences for this momentous failure. No one lost their job and few probably even missed a scheduled promotion. Everyone was given a collective “who could have known?” amnesty. This leaves us with the absurd situation where a dishwasher who breaks the dishes get fired, a custodian that doesn’t clean the toilet gets fired, but an elite economist who completely misses the worst economic disaster in 70 years gets promoted to yet another six-figure salary position.
And, departing briefly from my area of expertise, none of the geniuses who thought invading Iraq was a good idea back in 2003 seems to be on the unemployment lines today. Again, there was another collective “who could have known?” amnesty, with those responsible for what was quite possibly the greatest foreign policy disaster in US history still considered experts in the area and drawing high salaries.
When we have a world in which the so-called experts are not held accountable for their failures, even when they are massive, and they consistently look down on the people who question their expertise, it undermines belief in truth. It would have been nice if Lozada had explored this aspect of the issue, but hey, it’s the Washington Post.
Carlos Lozada, the non-fiction book critic for the Washington Post, promised “an honest investigation” of whether truth can survive the Trump administration in the lead article in the paper’s Sunday Outlook section. He delivers considerably less.
Most importantly and incredibly, Lozada never considers the possibility that respect for traditional purveyors of “truth” has been badly weakened by the fact that they have failed to do so in many important ways in recent years. Furthermore, they have used their elite status (prized university positions and access to major media outlets) to deride those who challenged them as being unthinking illiterates.
This dynamic is most clear in the trade policy pursued by the United States over the last four decades. This policy had the predicted and actual effect of eliminating the jobs of millions of manufacturing workers and reducing the pay of tens of millions of workers with less than a college education. The people who suffered the negative effects of these policies were treated as stupid no-nothings and wrongly told that their suffering was due to automation or was an inevitable product of globalization.
These claims are what those of us still living in the world of truth know as “lies,” but you will never see anyone allowed to make these points in the Washington Post. After all, its readers can’t be allowed to see such thoughts. (Yes, I am once again plugging my [free] book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.)
This was far from the only major failure of the purveyors of truth. The economic crisis caused by the collapse of the housing bubble cost millions of workers their jobs and/or houses. While this collapse was 100 percent predictable for anyone with a basic knowledge of economics, with almost no exceptions, our elite economists failed to see it coming and ridiculed those who warned of the catastrophe.
Incredibly, there were no career consequences for this momentous failure. No one lost their job and few probably even missed a scheduled promotion. Everyone was given a collective “who could have known?” amnesty. This leaves us with the absurd situation where a dishwasher who breaks the dishes get fired, a custodian that doesn’t clean the toilet gets fired, but an elite economist who completely misses the worst economic disaster in 70 years gets promoted to yet another six-figure salary position.
And, departing briefly from my area of expertise, none of the geniuses who thought invading Iraq was a good idea back in 2003 seems to be on the unemployment lines today. Again, there was another collective “who could have known?” amnesty, with those responsible for what was quite possibly the greatest foreign policy disaster in US history still considered experts in the area and drawing high salaries.
When we have a world in which the so-called experts are not held accountable for their failures, even when they are massive, and they consistently look down on the people who question their expertise, it undermines belief in truth. It would have been nice if Lozada had explored this aspect of the issue, but hey, it’s the Washington Post.
Read More Leer más Join the discussion Participa en la discusión
Apparently, the idea that China would ignore US intellectual property claims as a weapon in Trump’s trade war is simply unimaginable to Rampell, the Post’s lead economic columnist. It doesn’t even merit a sentence in a column devoted to the alternatives China might pursue given the limited amount of US imports on which it can impose tariffs. Since Rampell can’t imagine how this weapon can work, let me try.
Suppose that China’s government announces that, in response to Trump’s latest round of tariffs, it will not be enforcing any of Microsoft’s copyrights, starting on September 1, 2018. This means not only that everyone in China would be able to buy computers with Windows operating system and Microsoft’s Office Suite without sending Bill Gates a penny, but computers manufactured in China could be sent all over the world without Microsoft collecting anything. The same would be true for Apple’s iPhones.
This would also apply to prescription drugs. China could start manufacturing generic versions of drugs like the Hepatitis C drugs Sovaldi and Harvoni, which have list prices of more than $80,000 for a course of treatment. China could make the generic versions available both to its own people and the rest of the world for a few hundred dollars, with the manufacturers still making a healthy profit.
And, that latest Hollywood hit movie? Imagine anyone, anywhere in the world could download it in seconds for free. Of course, the same would apply to new music as well as the older movies and music that still generate money for the entertainment industry.
Does anyone think these moves might get a little attention from US corporations? My guess is that they would probably take notice and probably be threatening Republican members of Congress in a really big way if they didn’t act quickly to rein in their president.
But, that’s just my speculation.
Apparently, the idea that China would ignore US intellectual property claims as a weapon in Trump’s trade war is simply unimaginable to Rampell, the Post’s lead economic columnist. It doesn’t even merit a sentence in a column devoted to the alternatives China might pursue given the limited amount of US imports on which it can impose tariffs. Since Rampell can’t imagine how this weapon can work, let me try.
Suppose that China’s government announces that, in response to Trump’s latest round of tariffs, it will not be enforcing any of Microsoft’s copyrights, starting on September 1, 2018. This means not only that everyone in China would be able to buy computers with Windows operating system and Microsoft’s Office Suite without sending Bill Gates a penny, but computers manufactured in China could be sent all over the world without Microsoft collecting anything. The same would be true for Apple’s iPhones.
This would also apply to prescription drugs. China could start manufacturing generic versions of drugs like the Hepatitis C drugs Sovaldi and Harvoni, which have list prices of more than $80,000 for a course of treatment. China could make the generic versions available both to its own people and the rest of the world for a few hundred dollars, with the manufacturers still making a healthy profit.
And, that latest Hollywood hit movie? Imagine anyone, anywhere in the world could download it in seconds for free. Of course, the same would apply to new music as well as the older movies and music that still generate money for the entertainment industry.
Does anyone think these moves might get a little attention from US corporations? My guess is that they would probably take notice and probably be threatening Republican members of Congress in a really big way if they didn’t act quickly to rein in their president.
But, that’s just my speculation.
Read More Leer más Join the discussion Participa en la discusión
In case you were wondering how large that $33 billion increase in military spending that the other NATO countries agreed to was, it comes to roughly 0.16 percent of their collective GDP. Apparently Donald Trump was impressed with this commitment since he called it “really amazing.”
In case you were wondering how large that $33 billion increase in military spending that the other NATO countries agreed to was, it comes to roughly 0.16 percent of their collective GDP. Apparently Donald Trump was impressed with this commitment since he called it “really amazing.”
Read More Leer más Join the discussion Participa en la discusión
The Washington Post had an interesting piece on how people with chronic conditions, such as high blood pressure, can now have key measures monitored remotely on an ongoing basis through a new program. This will allow for health care professionals to quickly detect problems and recommend steps to counteract them or to see a physician for care, if needed. As the piece points out, this is likely to lead to both better health outcomes and lower costs, as many patients may take steps to alleviate problems before they become life-threatening issues and need emergency care.
While this program as described in the piece sounds like a substantial improvement in health care, it is interesting how it would appear in our national income accounts and measures of health care inflation. If better monitoring of blood pressure and other risk factors leads to fewer strokes and heart attacks, and therefore fewer people coming in for treating emergencies, it will mean that less health care is being provided in our GDP accounts.
The savings also would not appear as a reduction in health care costs in measures like the Consumer Price Index (CPI). The CPI measures the increase in the price of specific goods and services. If we need fewer services because we have found ways, such as better monitoring, to improve people’s health, it is not picked up in the index.
This method of accounting is why some of us have advocated pulling health care spending out of GDP measures instead looking at what we spend net of health expenditures and then using various measures of health status to determine the extent to which we are making progress. After all, we care about how long and how well people live, not how many bypass surgeries they receive.
The Washington Post had an interesting piece on how people with chronic conditions, such as high blood pressure, can now have key measures monitored remotely on an ongoing basis through a new program. This will allow for health care professionals to quickly detect problems and recommend steps to counteract them or to see a physician for care, if needed. As the piece points out, this is likely to lead to both better health outcomes and lower costs, as many patients may take steps to alleviate problems before they become life-threatening issues and need emergency care.
While this program as described in the piece sounds like a substantial improvement in health care, it is interesting how it would appear in our national income accounts and measures of health care inflation. If better monitoring of blood pressure and other risk factors leads to fewer strokes and heart attacks, and therefore fewer people coming in for treating emergencies, it will mean that less health care is being provided in our GDP accounts.
The savings also would not appear as a reduction in health care costs in measures like the Consumer Price Index (CPI). The CPI measures the increase in the price of specific goods and services. If we need fewer services because we have found ways, such as better monitoring, to improve people’s health, it is not picked up in the index.
This method of accounting is why some of us have advocated pulling health care spending out of GDP measures instead looking at what we spend net of health expenditures and then using various measures of health status to determine the extent to which we are making progress. After all, we care about how long and how well people live, not how many bypass surgeries they receive.
Read More Leer más Join the discussion Participa en la discusión
As we remain mired in the longest period of weak productivity growth in recorded US history, the NYT ran yet another piece on coping with the problem of automation creating mass job displacement. This one is focused on the developing world and asks how developing countries could cope with massive displacement of workers in agriculture and manufacturing.
Incredibly (perhaps not incredibly) the possibility of ignoring the patent and copyright monopolies that rich countries demand does not appear on the list of remedies. If new technologies were available in a free market without these government imposed monopolies, it would mean that developing countries could hugely increase their agricultural and manufacturing output at very low cost.
That should be a good story for them, not a crisis. But apparently, reporters are not allowed to raise questions about patent and copyright monopolies in The New York Times.
As we remain mired in the longest period of weak productivity growth in recorded US history, the NYT ran yet another piece on coping with the problem of automation creating mass job displacement. This one is focused on the developing world and asks how developing countries could cope with massive displacement of workers in agriculture and manufacturing.
Incredibly (perhaps not incredibly) the possibility of ignoring the patent and copyright monopolies that rich countries demand does not appear on the list of remedies. If new technologies were available in a free market without these government imposed monopolies, it would mean that developing countries could hugely increase their agricultural and manufacturing output at very low cost.
That should be a good story for them, not a crisis. But apparently, reporters are not allowed to raise questions about patent and copyright monopolies in The New York Times.
Read More Leer más Join the discussion Participa en la discusión
