I can’t say I’ve been following all the details here, but it’s hard to see why a public university should have secret agreements with funders. If the Kochs don’t want the terms of their funding exposed to the public, then the conditions probably are not proper. Universities should not be in the business of selling legitimating arguments for political positions.
The same story applies to private universities that want to be taken seriously. In fact, it would be a good rule to have as a condition of receiving their taxpayer subsidy (tax-exempt status). Let Corrupt University take as much money as it wants from the Koch gang, but the rest of us should not have to subsidize their sleaze.
I can’t say I’ve been following all the details here, but it’s hard to see why a public university should have secret agreements with funders. If the Kochs don’t want the terms of their funding exposed to the public, then the conditions probably are not proper. Universities should not be in the business of selling legitimating arguments for political positions.
The same story applies to private universities that want to be taken seriously. In fact, it would be a good rule to have as a condition of receiving their taxpayer subsidy (tax-exempt status). Let Corrupt University take as much money as it wants from the Koch gang, but the rest of us should not have to subsidize their sleaze.
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This is an important point to remember in coverage of the Federal Reserve Board’s plans on interest rates. Former Fed Chair Janet Yellen repeatedly reminded the public that the 2.0 percent target is intended to be an average.
The inflation rate, as measured by the consumer price expenditure deflator, has been under 2.0 percent for most of the last six years. This means the Fed should be prepared to allow the rate to rise modestly above 2.0 percent given its target. We will have a recession at some point in the future, which will lower the inflation rate. This means the Fed should be looking to have the inflation rise to perhaps 2.5 percent, or even slightly higher if 2.0 percent is the actual target.
It is also worth noting that inflation has not been following the normal pattern in past recoveries. The inflation we are seeing is hugely concentrated in housing. Pulling out rent, the core inflation rate is rising at roughly a 1.0 percent annual rate. In the past, rental inflation has not differed much from the rate of inflation in other goods and services.
Rents are driven by a shortage of housing, not wage-cost pressures. Also, higher interest rates are likely discouraging construction, making the housing shortage worse, so it’s not clear that higher interest rates are a good mechanism to combat the inflation we are now seeing.
CPI Minus Food, Energy, and Shelter: Percent Change Last 12 Months
Source: Bureau of Labor Statistics.
This is an important point to remember in coverage of the Federal Reserve Board’s plans on interest rates. Former Fed Chair Janet Yellen repeatedly reminded the public that the 2.0 percent target is intended to be an average.
The inflation rate, as measured by the consumer price expenditure deflator, has been under 2.0 percent for most of the last six years. This means the Fed should be prepared to allow the rate to rise modestly above 2.0 percent given its target. We will have a recession at some point in the future, which will lower the inflation rate. This means the Fed should be looking to have the inflation rise to perhaps 2.5 percent, or even slightly higher if 2.0 percent is the actual target.
It is also worth noting that inflation has not been following the normal pattern in past recoveries. The inflation we are seeing is hugely concentrated in housing. Pulling out rent, the core inflation rate is rising at roughly a 1.0 percent annual rate. In the past, rental inflation has not differed much from the rate of inflation in other goods and services.
Rents are driven by a shortage of housing, not wage-cost pressures. Also, higher interest rates are likely discouraging construction, making the housing shortage worse, so it’s not clear that higher interest rates are a good mechanism to combat the inflation we are now seeing.
CPI Minus Food, Energy, and Shelter: Percent Change Last 12 Months
Source: Bureau of Labor Statistics.
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Not really. The Guardian has an article that begins by telling readers how Amazon produces a copy of a designer laptop stand and sells it for half the price as the designer stand. While the article correctly refers to the Amazon product a “knockoff,” in other contexts, such as when discussing Chinese copies of US products, these copies are often referred to as “counterfeits.”
This is not just a question of semantics. With a counterfeit, the buyer is being deceived. They pay a higher price because they actually believe that it is produced by the company in question. In the case of a knockoff, or unauthorized copy, the buyer knows that they are not getting the product produced the designer company, but are paying a considerably lower price.
In the case of the knockoff, the customer is benefiting, as is the seller. There could be an issue where the designer’s property rights are being violated, but both of the parties to the exchange are benefiting. By contrast, in the case of a counterfeit item, the buyer is being ripped off. They pay more for the item because it has been misrepresented.
Not really. The Guardian has an article that begins by telling readers how Amazon produces a copy of a designer laptop stand and sells it for half the price as the designer stand. While the article correctly refers to the Amazon product a “knockoff,” in other contexts, such as when discussing Chinese copies of US products, these copies are often referred to as “counterfeits.”
This is not just a question of semantics. With a counterfeit, the buyer is being deceived. They pay a higher price because they actually believe that it is produced by the company in question. In the case of a knockoff, or unauthorized copy, the buyer knows that they are not getting the product produced the designer company, but are paying a considerably lower price.
In the case of the knockoff, the customer is benefiting, as is the seller. There could be an issue where the designer’s property rights are being violated, but both of the parties to the exchange are benefiting. By contrast, in the case of a counterfeit item, the buyer is being ripped off. They pay more for the item because it has been misrepresented.
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Just curious, since Marketplace radio told listeners about the shortage of workers in the residential construction industry for jobs that pay $17.61 an hour. Would we be hearing that there is a shortage of doctors (or lawyers or economists) if few were willing to work at $17.61 an hour?
I know these professions require much more training (although construction workers seem to do much better at their jobs than economists), but if the wage on offer for jobs in these professions was ridiculously low, most likely reporters would be calling attention to the low pay rather than the lack of willing workers.
Just curious, since Marketplace radio told listeners about the shortage of workers in the residential construction industry for jobs that pay $17.61 an hour. Would we be hearing that there is a shortage of doctors (or lawyers or economists) if few were willing to work at $17.61 an hour?
I know these professions require much more training (although construction workers seem to do much better at their jobs than economists), but if the wage on offer for jobs in these professions was ridiculously low, most likely reporters would be calling attention to the low pay rather than the lack of willing workers.
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The Washington Post noted the 6.0 percent rise in business investment in the first quarter and said that it seems to contradict the drop of 0.1 percent in capital goods orders (excluding aircraft) in March. There actually is no contradiction.
Capital goods orders are forward-looking, indicating businesses’ intentions for how much they want to invest over the next year or two, sometimes longer. Their investment in the first quarter is mostly the outcome of investment made in prior quarters.
If we are looking for the impact of the tax cut on investment, we should be focused on orders. The growth figures touted by the Republicans imply growth of roughly 25 percentage points over baseline growth. The 6.0 percent figure is consistent with the recent trend; if the tax cut leads to anything like the growth promised by the Republicans, we should be seeing growth well into the double digits.
The Washington Post noted the 6.0 percent rise in business investment in the first quarter and said that it seems to contradict the drop of 0.1 percent in capital goods orders (excluding aircraft) in March. There actually is no contradiction.
Capital goods orders are forward-looking, indicating businesses’ intentions for how much they want to invest over the next year or two, sometimes longer. Their investment in the first quarter is mostly the outcome of investment made in prior quarters.
If we are looking for the impact of the tax cut on investment, we should be focused on orders. The growth figures touted by the Republicans imply growth of roughly 25 percentage points over baseline growth. The 6.0 percent figure is consistent with the recent trend; if the tax cut leads to anything like the growth promised by the Republicans, we should be seeing growth well into the double digits.
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Yes, it’s the old looming demographic crisis again. It seems China is not going to have enough workers just as robots are taking all the jobs. Now that’s a bleak future.
Yes, it’s the old looming demographic crisis again. It seems China is not going to have enough workers just as robots are taking all the jobs. Now that’s a bleak future.
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We all know how upset some folks get at the idea that people get food stamps from the government. So let’s get some of the righteous outrage directed at Robert R. Redfield, Trump’s pick to be the new head of the Center for Disease Control and Prevention (CDC).
According to an NYT article, Dr. Redfield will earn $375,000 a year in this post. According to the article, Redfield is able to get this high pay through a loophole that allows the government to pay more money to people who are uniquely qualified for their position. Redfield’s predecessor earned $197,300. It seems difficult to argue that Redfield is uniquely qualified for this position since he has no experience running a large bureaucracy and limited background in public health.
If people would like some context for this overpayment, the average annual benefit for a food stamp beneficiary is $1,512. This means that the overpayment to Redfield (compared to his predecessor’s pay) is equivalent to 110 years of a typical beneficiary’s food stamps.
Note: An earlier version had incorrectly identified the director of CDC as “Dr. Redford.”
We all know how upset some folks get at the idea that people get food stamps from the government. So let’s get some of the righteous outrage directed at Robert R. Redfield, Trump’s pick to be the new head of the Center for Disease Control and Prevention (CDC).
According to an NYT article, Dr. Redfield will earn $375,000 a year in this post. According to the article, Redfield is able to get this high pay through a loophole that allows the government to pay more money to people who are uniquely qualified for their position. Redfield’s predecessor earned $197,300. It seems difficult to argue that Redfield is uniquely qualified for this position since he has no experience running a large bureaucracy and limited background in public health.
If people would like some context for this overpayment, the average annual benefit for a food stamp beneficiary is $1,512. This means that the overpayment to Redfield (compared to his predecessor’s pay) is equivalent to 110 years of a typical beneficiary’s food stamps.
Note: An earlier version had incorrectly identified the director of CDC as “Dr. Redford.”
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The NYT had a seriously confused column by Lan Cao on U.S. trade policy. The piece touts the dollar’s role as the world’s leading currency, highlighting the fact that most oil is traded in dollars.
In reality, the need for countries to get dollars to buy oil is trivial. If a country does not otherwise want to hold dollars, it can hold its assets in any major currency. Since there are massive currency markets in which trillions of dollars worth of currency change hands every day, it can sell whatever currency it chooses to hold half a second before it needs the dollars to pay for oil. It would then be the oil seller’s decision as to whether to keep the dollars or to change to a preferred currency.
The half-second demand for dollars created by the purchase of oil has a trivial impact in currency markets. If 60 million barrels of oil a day are traded and the price of oil is $70 a barrel, this comes to $4.2 billion a day. If this were done all the same half-second, it would be a minor blip in the currency market. Over the course of a day, it would not even be noticeable.
The piece also refers to China’s massive accumulation of dollars in the last decade as a positive for the US economy. China did not accumulate dollars because it in any way needed dollars. It accumulated dollars to keep down the value of its currency. This allowed it to run a massive trade surplus that peaked at more than 10 percent of GDP in 2007. (Fast-growing developing countries are expected to run trade deficits, as capital flows in.)
China’s trade surplus was associated with an explosion of the trade deficit in the United States. This led to the massive job loss in manufacturing in places like Pennsylvania, Ohio, and Michigan. It is difficult to see how this is a good story for the United States.
The gap in demand in the economy that resulted from the trade deficit was filled by the housing bubble. The collapse of the bubble gave us the Great Recession, from which we are just now recovering.
If this is “winning” the trade war, as the piece claims, it is difficult to imagine what losing would be like.
The NYT had a seriously confused column by Lan Cao on U.S. trade policy. The piece touts the dollar’s role as the world’s leading currency, highlighting the fact that most oil is traded in dollars.
In reality, the need for countries to get dollars to buy oil is trivial. If a country does not otherwise want to hold dollars, it can hold its assets in any major currency. Since there are massive currency markets in which trillions of dollars worth of currency change hands every day, it can sell whatever currency it chooses to hold half a second before it needs the dollars to pay for oil. It would then be the oil seller’s decision as to whether to keep the dollars or to change to a preferred currency.
The half-second demand for dollars created by the purchase of oil has a trivial impact in currency markets. If 60 million barrels of oil a day are traded and the price of oil is $70 a barrel, this comes to $4.2 billion a day. If this were done all the same half-second, it would be a minor blip in the currency market. Over the course of a day, it would not even be noticeable.
The piece also refers to China’s massive accumulation of dollars in the last decade as a positive for the US economy. China did not accumulate dollars because it in any way needed dollars. It accumulated dollars to keep down the value of its currency. This allowed it to run a massive trade surplus that peaked at more than 10 percent of GDP in 2007. (Fast-growing developing countries are expected to run trade deficits, as capital flows in.)
China’s trade surplus was associated with an explosion of the trade deficit in the United States. This led to the massive job loss in manufacturing in places like Pennsylvania, Ohio, and Michigan. It is difficult to see how this is a good story for the United States.
The gap in demand in the economy that resulted from the trade deficit was filled by the housing bubble. The collapse of the bubble gave us the Great Recession, from which we are just now recovering.
If this is “winning” the trade war, as the piece claims, it is difficult to imagine what losing would be like.
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Many progressives, including this one, have worked to come up with ways around the Republican tax laws limits on the deduction for state and local taxes (SALT). The reason is that we worry that the increased cost of these taxes will reduce the ability of states like New York and California to maintain and expand relatively generous social safety nets and support for education, health care, and child care.
When these taxes were fully deductible, the federal government effectively picked up 40 cents of each dollar of taxes on these states higher income residents. With the cap, these taxes will be borne 100 percent by the states’ residents. This is likely to make them more resistant to taxes. (This is the hypothesis that rich people are more resistant to higher taxes than to lower taxes.) It may also cause some to leave the state or find ways to avoid/evade their taxes.
For some reason, the Post was unable to find anyone to make these points until most of the way through its piece on efforts to work around the tax. It also misrepresented these efforts by implying that only very high-income people would benefit from them.
The first workaround to be passed into law was an optional 5.0 percent employer-side payroll tax in New York, which could apply to wages above $40,000. This would be a substitute for the state income tax.
A person who earns $100,000 a year (apparently now a high-income person in Washington Post land) would pay $3,000 in state employer-side taxes under this plan. That would be expected to come out of their wages, meaning that their taxable income for federal tax purposes would now be $97,000 instead of $100,000. Since this person (assuming a single individual) is in the 22 percent tax bracket, this switch would save them $660 dollars on their federal income taxes. This is the case whether or not they itemize.
Since their pay is $3,000 less, they would also save their Social Security and Medicare taxes as well. This is a 7.65 percent on the employee’s side, which gets them another $230 in savings, bringing their total savings to $890 a year.
It is obvious that the Post doesn’t like this sort of workaround but usually, pieces like this are reserved for the opinion pages and also try to be more accurate.
Many progressives, including this one, have worked to come up with ways around the Republican tax laws limits on the deduction for state and local taxes (SALT). The reason is that we worry that the increased cost of these taxes will reduce the ability of states like New York and California to maintain and expand relatively generous social safety nets and support for education, health care, and child care.
When these taxes were fully deductible, the federal government effectively picked up 40 cents of each dollar of taxes on these states higher income residents. With the cap, these taxes will be borne 100 percent by the states’ residents. This is likely to make them more resistant to taxes. (This is the hypothesis that rich people are more resistant to higher taxes than to lower taxes.) It may also cause some to leave the state or find ways to avoid/evade their taxes.
For some reason, the Post was unable to find anyone to make these points until most of the way through its piece on efforts to work around the tax. It also misrepresented these efforts by implying that only very high-income people would benefit from them.
The first workaround to be passed into law was an optional 5.0 percent employer-side payroll tax in New York, which could apply to wages above $40,000. This would be a substitute for the state income tax.
A person who earns $100,000 a year (apparently now a high-income person in Washington Post land) would pay $3,000 in state employer-side taxes under this plan. That would be expected to come out of their wages, meaning that their taxable income for federal tax purposes would now be $97,000 instead of $100,000. Since this person (assuming a single individual) is in the 22 percent tax bracket, this switch would save them $660 dollars on their federal income taxes. This is the case whether or not they itemize.
Since their pay is $3,000 less, they would also save their Social Security and Medicare taxes as well. This is a 7.65 percent on the employee’s side, which gets them another $230 in savings, bringing their total savings to $890 a year.
It is obvious that the Post doesn’t like this sort of workaround but usually, pieces like this are reserved for the opinion pages and also try to be more accurate.
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The NYT had an interesting column on the impact that the location of Amazon’s new headquarters would have on rents in the finalist cities. The column reports projections from Zillow on how much more the median rents would rise over the next decade due to the presence of Amazon.
Topping the list is Los Angeles, where Zillow projected that the median monthly rent will be $740 higher in 2028 if Amazon puts its second headquarters there. This means that the median renter in the city will be paying an Amazon tax, in the form of higher rents, of almost $9,000 a year for the privilege of having Jeff Bezos company located in her city.
If Bezos chooses Denver, the median tenant will be paying an extra $720 a month, or $8,600 a year to enjoy Amazon’s presence. Bostonians would have to pay $485 a month or $5,800 a year to have Amazon as a neighbor.
While this analysis is very speculative, it shows how many residents of the city “winning” the Amazon location game show could be big losers. This is especially true if the city’s secret concession package costs large amounts of future tax revenue and/or commits the city to large Amazon-specific subsidies.
The point about the location of businesses and the cost of housing is an issue that comes up in other contexts as well. For example, the explosion of the financial sector in New York has sent rents through the roof there. This likely means that New Yorkers who do not derive their income directly or indirectly from the industry lose from its presence. (That would not be the case for property owners.)
It is worth noting that the piece reports Amazon says it contributed $40 million to support affordable housing in Seattle. If a new unit costs on average $200,000, this means Amazon’s contribution was sufficient to build 200 units.
The NYT had an interesting column on the impact that the location of Amazon’s new headquarters would have on rents in the finalist cities. The column reports projections from Zillow on how much more the median rents would rise over the next decade due to the presence of Amazon.
Topping the list is Los Angeles, where Zillow projected that the median monthly rent will be $740 higher in 2028 if Amazon puts its second headquarters there. This means that the median renter in the city will be paying an Amazon tax, in the form of higher rents, of almost $9,000 a year for the privilege of having Jeff Bezos company located in her city.
If Bezos chooses Denver, the median tenant will be paying an extra $720 a month, or $8,600 a year to enjoy Amazon’s presence. Bostonians would have to pay $485 a month or $5,800 a year to have Amazon as a neighbor.
While this analysis is very speculative, it shows how many residents of the city “winning” the Amazon location game show could be big losers. This is especially true if the city’s secret concession package costs large amounts of future tax revenue and/or commits the city to large Amazon-specific subsidies.
The point about the location of businesses and the cost of housing is an issue that comes up in other contexts as well. For example, the explosion of the financial sector in New York has sent rents through the roof there. This likely means that New Yorkers who do not derive their income directly or indirectly from the industry lose from its presence. (That would not be the case for property owners.)
It is worth noting that the piece reports Amazon says it contributed $40 million to support affordable housing in Seattle. If a new unit costs on average $200,000, this means Amazon’s contribution was sufficient to build 200 units.
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