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After all, being a columnist at the NYT is a pretty good gig. Yet he repeatedly shows he doesn’t have a clue on the issues on which he pontificates.
In his latest effort he criticizes the people he dubs “radicals” and contrasts them with radicals of prior years. He tells readers:
“Today’s radicals do not want to upend the meritocracy, which is creating a caste system of inherited inequality. They don’t want to stop technical innovation, which is displacing millions of workers.”
Really, it is meritocracy that gives us patent and copyright monopolies, that bails out Wall Street billionaires who put their banks into bankruptcy, that protects doctors and dentists from foreign competition? It is meritocracy that gives us a corrupt corporate governance structure that allows CEOs to largely set their own pay? It is meritocracy that gives us fiscal and monetary policies that denied jobs to millions following the collapse of the housing bubble?
That doesn’t fit my definition of meritocracy. That sure looks like a rigged system designed to redistribute income upward. (Yeah, I’m plugging my free book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.)
But Brooks makes his case:
“Well, they are wrong that our institutions are fundamentally corrupt. Most of our actual social and economic problems are the bad byproducts of fundamentally good trends.”
Okay, if he says so. I thought people were supposed to have to argue for their positions based on evidence, but in David Brooks’ “meritocracy” you can make unsupported assertions and get published in the NYT twice a week.
After all, being a columnist at the NYT is a pretty good gig. Yet he repeatedly shows he doesn’t have a clue on the issues on which he pontificates.
In his latest effort he criticizes the people he dubs “radicals” and contrasts them with radicals of prior years. He tells readers:
“Today’s radicals do not want to upend the meritocracy, which is creating a caste system of inherited inequality. They don’t want to stop technical innovation, which is displacing millions of workers.”
Really, it is meritocracy that gives us patent and copyright monopolies, that bails out Wall Street billionaires who put their banks into bankruptcy, that protects doctors and dentists from foreign competition? It is meritocracy that gives us a corrupt corporate governance structure that allows CEOs to largely set their own pay? It is meritocracy that gives us fiscal and monetary policies that denied jobs to millions following the collapse of the housing bubble?
That doesn’t fit my definition of meritocracy. That sure looks like a rigged system designed to redistribute income upward. (Yeah, I’m plugging my free book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.)
But Brooks makes his case:
“Well, they are wrong that our institutions are fundamentally corrupt. Most of our actual social and economic problems are the bad byproducts of fundamentally good trends.”
Okay, if he says so. I thought people were supposed to have to argue for their positions based on evidence, but in David Brooks’ “meritocracy” you can make unsupported assertions and get published in the NYT twice a week.
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A Washington Post article on the Republican tax proposals being considered by Congress implies that they are sharp departure from the plans Donald Trump put forward in the campaign in the benefits it provides to the rich. The headline is “as tax plan gained steam GOP lost focus on the middle class.”
This description is pretty much 180 degrees at odds with reality. While Donald Trump always promised to help the middle class, the proposals he put forward during his campaign were hugely tilted toward the rich. The Tax Policy Center’s analysis of the last tax cut plan he proposed before the election showed 50 percent of the benefits going to the richest one percent of the population.
In fact, the Republicans are putting in place a tax plan similar to what they campaigned on. If the fact that it mostly helps the rich is a surprise to anyone it is due to the poor quality of reporting during the campaign.
A Washington Post article on the Republican tax proposals being considered by Congress implies that they are sharp departure from the plans Donald Trump put forward in the campaign in the benefits it provides to the rich. The headline is “as tax plan gained steam GOP lost focus on the middle class.”
This description is pretty much 180 degrees at odds with reality. While Donald Trump always promised to help the middle class, the proposals he put forward during his campaign were hugely tilted toward the rich. The Tax Policy Center’s analysis of the last tax cut plan he proposed before the election showed 50 percent of the benefits going to the richest one percent of the population.
In fact, the Republicans are putting in place a tax plan similar to what they campaigned on. If the fact that it mostly helps the rich is a surprise to anyone it is due to the poor quality of reporting during the campaign.
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Of course, The Washington Post would never make such an assertion, even if there is good reason to think that it is true. Instead, an article on Friday’s jobs report told readers:
“President Trump and Republicans on Capitol Hill have said they hope to pass sweeping changes to the tax code by the end of December, a move they believe will create more good-paying jobs and supercharge economic growth.”
This is again an inexplicable excursion into mind reading. The Post really has no idea what Republican politicians believe. Why is it so hard to just report what they say and leave the speculation on their true beliefs to readers?
This piece also included an inaccurate statement from Jason Furman, who served as President Obama’s chief economist. He quotes Furman as saying:
“‘They’re [workers] more confidently quitting their jobs to find another. Everything with the way people are behaving is consistent with the strength in the labor market. But wages just aren’t picking up the way we thought they would.'”
In fact, the share of unemployment due to people voluntarily quitting their jobs is much lower than it has been in the past when the unemployment rate got this low. The most recent numbers put the share of unemployment due to voluntary quits at just over 11.0 percent. By contrast in 1999 and 2000, the share was over 13 percent and peaked at more than 15.0 percent. This suggests that workers are much less confident in their job prospects than they were the last time the unemployment rate was near 4.0 percent.
Percent of Unemployment Due to Job Leavers
Source: Bureau of Labor Statistics.
Of course, The Washington Post would never make such an assertion, even if there is good reason to think that it is true. Instead, an article on Friday’s jobs report told readers:
“President Trump and Republicans on Capitol Hill have said they hope to pass sweeping changes to the tax code by the end of December, a move they believe will create more good-paying jobs and supercharge economic growth.”
This is again an inexplicable excursion into mind reading. The Post really has no idea what Republican politicians believe. Why is it so hard to just report what they say and leave the speculation on their true beliefs to readers?
This piece also included an inaccurate statement from Jason Furman, who served as President Obama’s chief economist. He quotes Furman as saying:
“‘They’re [workers] more confidently quitting their jobs to find another. Everything with the way people are behaving is consistent with the strength in the labor market. But wages just aren’t picking up the way we thought they would.'”
In fact, the share of unemployment due to people voluntarily quitting their jobs is much lower than it has been in the past when the unemployment rate got this low. The most recent numbers put the share of unemployment due to voluntary quits at just over 11.0 percent. By contrast in 1999 and 2000, the share was over 13 percent and peaked at more than 15.0 percent. This suggests that workers are much less confident in their job prospects than they were the last time the unemployment rate was near 4.0 percent.
Percent of Unemployment Due to Job Leavers
Source: Bureau of Labor Statistics.
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This would have been useful information to include in an article on various proposals to alter the program. While the article does helpfully point out the limited size of benefits to the typical recipient, it reports the total cost as $73 billion a year.
Since most people are not very familiar with the size of the federal budget, they may think the food stamp program accounts for a substantial share of their tax dollars. For this reason, it would have been helpful to express this figure as a share of the total budget.
This would have been useful information to include in an article on various proposals to alter the program. While the article does helpfully point out the limited size of benefits to the typical recipient, it reports the total cost as $73 billion a year.
Since most people are not very familiar with the size of the federal budget, they may think the food stamp program accounts for a substantial share of their tax dollars. For this reason, it would have been helpful to express this figure as a share of the total budget.
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A Morning Edition segment on the Republican tax cut plan made comparisons to the Reagan tax cuts and referred to the “boom” that occurred following the tax cuts. While the economy did grow rapidly in the years from 1983 to 1986, the main reason was the severity of the 1981–82 recession. Economies tend to bounce back quickly following a severe recession.
We saw the same story in the 1970s. The economy grew at a 5.7 percent annual rate in the thirteen quarters from the fourth quarter of 1982 to first quarter of 1986. This is not hugely different than the 5.3 percent annual growth rate from the first quarter of 1975 to the third quarter of 1977. The key to the more rapid growth in the Reagan recovery was the somewhat greater severity of the 1981–82 recession, which pushed unemployment almost to 11.0 percent.
It is also worth mentioning the poor performance of investment following the reduction in the corporate income tax in 1986. The tax reform act passed in that year lowered the corporate rate from 46 percent to 35 percent, roughly the same size reduction as is included in the current bill. Rather than leading to a boom, investment actually fell as a share of GDP over the next three years.
A Morning Edition segment on the Republican tax cut plan made comparisons to the Reagan tax cuts and referred to the “boom” that occurred following the tax cuts. While the economy did grow rapidly in the years from 1983 to 1986, the main reason was the severity of the 1981–82 recession. Economies tend to bounce back quickly following a severe recession.
We saw the same story in the 1970s. The economy grew at a 5.7 percent annual rate in the thirteen quarters from the fourth quarter of 1982 to first quarter of 1986. This is not hugely different than the 5.3 percent annual growth rate from the first quarter of 1975 to the third quarter of 1977. The key to the more rapid growth in the Reagan recovery was the somewhat greater severity of the 1981–82 recession, which pushed unemployment almost to 11.0 percent.
It is also worth mentioning the poor performance of investment following the reduction in the corporate income tax in 1986. The tax reform act passed in that year lowered the corporate rate from 46 percent to 35 percent, roughly the same size reduction as is included in the current bill. Rather than leading to a boom, investment actually fell as a share of GDP over the next three years.
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The NYT article on the November jobs report notes the fact that the rate of wage growth does not appear to be appear accelerating. To explain why it presents the views of Michael Big, a general contractor in the Chicago area.
The piece tells readers that Mr. Big has had to turn away jobs in recent months because he can’t find the needed workers:
“‘Unfortunately we don’t have the labor to take all the projects that are coming in,’ Mr. Big said. His competitors are having the same problem, he added. ‘We’re all grumbling and complaining about the same thing, when we’re not poaching guys from each other.'”
The piece continues:
“Mr. Big’s experience raises a question: If workers are so hard to find, why aren’t companies raising pay? In his case, Mr. Big says that in order to pay more, he would have to charge his customers more, and if he does that, he’ll be outbid by his competitors.”
“‘The labor is there, but they’re not skilled enough for the wages they’re asking,’ Mr. Big said. He said construction workers without special skills were asking $15 an hour, well above the roughly $12 an hour he can afford.”
This presentation of the problem indicates the jobs really are not there. If people like Mr. Big are not prepared to pay enough to attract workers, then they really don’t have jobs to offer.
This is like if I want to see a doctor, but am only willing to pay $25 an hour. I probably would not find any doctors willing to work for that pay. In this case, I don’t really have a job for a doctor, or at least not in an economically meaningful sense. It is no surprise that jobs that offer pay below the market rate are not driving up wages.
The NYT article on the November jobs report notes the fact that the rate of wage growth does not appear to be appear accelerating. To explain why it presents the views of Michael Big, a general contractor in the Chicago area.
The piece tells readers that Mr. Big has had to turn away jobs in recent months because he can’t find the needed workers:
“‘Unfortunately we don’t have the labor to take all the projects that are coming in,’ Mr. Big said. His competitors are having the same problem, he added. ‘We’re all grumbling and complaining about the same thing, when we’re not poaching guys from each other.'”
The piece continues:
“Mr. Big’s experience raises a question: If workers are so hard to find, why aren’t companies raising pay? In his case, Mr. Big says that in order to pay more, he would have to charge his customers more, and if he does that, he’ll be outbid by his competitors.”
“‘The labor is there, but they’re not skilled enough for the wages they’re asking,’ Mr. Big said. He said construction workers without special skills were asking $15 an hour, well above the roughly $12 an hour he can afford.”
This presentation of the problem indicates the jobs really are not there. If people like Mr. Big are not prepared to pay enough to attract workers, then they really don’t have jobs to offer.
This is like if I want to see a doctor, but am only willing to pay $25 an hour. I probably would not find any doctors willing to work for that pay. In this case, I don’t really have a job for a doctor, or at least not in an economically meaningful sense. It is no surprise that jobs that offer pay below the market rate are not driving up wages.
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Now that we seem on the edge of giving lots more tax dollars to Donald Trump and his rich friends, the deficit hawks feel newly empowered and have Social Security and Medicare clearly in their sights. Robert Samuelson is on the job, telling us that we haven’t prepared for the aging of the population.
His primary weapon is a new report from the OECD on the aging problem. The report says that the ratio of the over 65 population to the 25 to 65 population is projected to rise from 0.124 in 2015 to 0.196 in 2050. Oh wait, I made a mistake, that was the increase in this ratio in the thirty five years from 1945 to 1980. The ratio is projected to rise from 0.246 in 2015 to 0.379 in 2050.
The ratio is projected to rise faster in the next 35 years than it did in the earlier period, but the rise in the ratio in the earlier period did not prevent the country from enjoying huge increases in living standards. The same should hold true over the next 35 years. Real compensation per hour is projected to rise by roughly 60 percent over the the 35 years from 2015 to 2050.
Suppose we had a huge 5.0 percentage point increase in the payroll tax to pay for Social Security and Medicare taxes over this period. This would still leave workers with 50 percent more compensation after-tax than what they have today. Are we scared yet?
Normal productivity growth swamps the impact of demographics, as fans of arithmetic everywhere know. I should also point out, if the robot and artificial intelligence enthusiasts are even half right, productivity will increase far more than the wage projections in the Social Security trustees report assumes.
At this point, all good Beat the Press readers are yelling that most workers have not seen their share of wage growth. The money has gone to CEOs, Wall Street types, doctors and other high end professionals. If that continues over the next 35 years most workers will have a very difficult time dealing with any increase in payroll taxes.
That point is exactly right, which is why the living standards of our children depend hugely on reversing the upward redistribution of the last four decades. That is the point of Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.
This is where the real money is. Folks like Robert Samuelson and the billionaire Peter Peterson are trying very hard to distract us from going after the rich, and instead go after our parents’ Social Security and Medicare. It’s a cheap trick, but they won’t give up trying.
It is also worth mentioning in this respect that the GDP we’ve lost as a result of failing to rein in the growth of the housing bubble, and not having an adequate fiscal stimulus following its collapse, dwarfs any tax increases that may be needed to fund Social Security and Medicare in the years ahead. But Robert Samuelson and the Peterson gang would rather not have us talk about that fact either.
Now that we seem on the edge of giving lots more tax dollars to Donald Trump and his rich friends, the deficit hawks feel newly empowered and have Social Security and Medicare clearly in their sights. Robert Samuelson is on the job, telling us that we haven’t prepared for the aging of the population.
His primary weapon is a new report from the OECD on the aging problem. The report says that the ratio of the over 65 population to the 25 to 65 population is projected to rise from 0.124 in 2015 to 0.196 in 2050. Oh wait, I made a mistake, that was the increase in this ratio in the thirty five years from 1945 to 1980. The ratio is projected to rise from 0.246 in 2015 to 0.379 in 2050.
The ratio is projected to rise faster in the next 35 years than it did in the earlier period, but the rise in the ratio in the earlier period did not prevent the country from enjoying huge increases in living standards. The same should hold true over the next 35 years. Real compensation per hour is projected to rise by roughly 60 percent over the the 35 years from 2015 to 2050.
Suppose we had a huge 5.0 percentage point increase in the payroll tax to pay for Social Security and Medicare taxes over this period. This would still leave workers with 50 percent more compensation after-tax than what they have today. Are we scared yet?
Normal productivity growth swamps the impact of demographics, as fans of arithmetic everywhere know. I should also point out, if the robot and artificial intelligence enthusiasts are even half right, productivity will increase far more than the wage projections in the Social Security trustees report assumes.
At this point, all good Beat the Press readers are yelling that most workers have not seen their share of wage growth. The money has gone to CEOs, Wall Street types, doctors and other high end professionals. If that continues over the next 35 years most workers will have a very difficult time dealing with any increase in payroll taxes.
That point is exactly right, which is why the living standards of our children depend hugely on reversing the upward redistribution of the last four decades. That is the point of Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.
This is where the real money is. Folks like Robert Samuelson and the billionaire Peter Peterson are trying very hard to distract us from going after the rich, and instead go after our parents’ Social Security and Medicare. It’s a cheap trick, but they won’t give up trying.
It is also worth mentioning in this respect that the GDP we’ve lost as a result of failing to rein in the growth of the housing bubble, and not having an adequate fiscal stimulus following its collapse, dwarfs any tax increases that may be needed to fund Social Security and Medicare in the years ahead. But Robert Samuelson and the Peterson gang would rather not have us talk about that fact either.
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Making mistakes is part of life. Serious people own up to them and correct themselves. Unfortunately, when it comes to NAFTA, this is not the practice of the Washington Post.
Ten years ago today, December 7, 2007, a Washington Post editorial attacked the three leading contenders for the Democratic nomination over their pledge to renegotiate NAFTA. The Post had long been a strong supporter of NAFTA, biasing both its news coverage and opinion pages to push pro-NAFTA views. Its editorial page staff was obviously upset to see Senators Hillary Clinton, John Edwards, and Barack Obama attack their beloved trade agreement.
The editorial, ironically titled “Trade Distortions,” told readers how NAFTA had provided large benefits to the United States. Then it stated:
“Not that any of the Democratic candidates seem to care, but the impact of NAFTA seems to have been both larger and more positive in Mexico than in the United States. Mexico’s gross domestic product, now more than $875 billion, has more than quadrupled since 1987.”
This one was a headscratcher for two reasons. First, NAFTA took effect in 1994 — why was the Post telling us about Mexico’s growth since 1987?
But this was the less important gaffe in this sentence. Mexico’s GDP “has more than quadrupled?” That is a pretty incredible claim on its face. If GDP quadruples in two decades, it implies an annual growth rate of 7.2 percent. While many developing countries have a brief spurt where they grow at this pace for two or three years, sustaining this sort of growth for two decades is truly extraordinary. China managed to do it, but not many other countries have. Was there another China growth miracle hiding south of the border that had somehow had gone unnoticed?
It turns out there wasn’t. According to the International Monetary Fund, adjusting for inflation, Mexico’s GDP went from 6,564 billion pesos in 1987 to 12,088 billion pesos in 2007.[1] That translates into cumulative growth of 84.2 percent, quite a bit different from the “more than quadrupled” claimed by the Washington Post. Rather than being a near-record-setting growth pace, this translates into a thoroughly mediocre 3.1 percent annual rate of growth.
On a per capita basis, Mexico’s growth trailed growth in the United States, averaging just 1.5 percent annually, compared to 1.9 percent in the United States. That’s not the expected story. Poor countries are supposed to be catching up to rich countries.
So how did the Post get this one so badly wrong? It’s possible that it looked at Mexico’s nominal GDP growth. This measure doesn’t adjust for the effects of inflation. Since Mexico had a very serious problem with inflation over most of this period, its nominal GDP did more than quadruple.
In fact, Mexico’s nominal GDP increased by more than a factor of 50, from 217.6 billion pesos in 1987 to 11,403.3 billion pesos in 2007. That certainly qualifies as “more than quadrupled.”
However, runaway inflation hardly makes a good case for NAFTA. While concerns over inflation have arguably been excessive in recent decades, inflation running well into the double digits is certainly a problem. In any case, higher inflation is hardly an outcome worth boasting about.
Anyhow, whatever the cause of the original error, the really disturbing part of the story is the Post’s refusal to correct it even after I called it to their attention. People view a newspaper like the Post as authoritative. As long as the mistaken numbers on Mexico’s growth appear on the paper’s website, it is possible that readers will find the piece and assume the numbers are correct. This is why serious newspapers append a correction to the bottom of an article or column that includes a major error.
For some reason, the Post has chosen not to acknowledge and correct its error over the last ten years. Let’s hope we don’t have to write a second edition of this piece in 2027.
[1] This uses 2008 constant pesos.
Making mistakes is part of life. Serious people own up to them and correct themselves. Unfortunately, when it comes to NAFTA, this is not the practice of the Washington Post.
Ten years ago today, December 7, 2007, a Washington Post editorial attacked the three leading contenders for the Democratic nomination over their pledge to renegotiate NAFTA. The Post had long been a strong supporter of NAFTA, biasing both its news coverage and opinion pages to push pro-NAFTA views. Its editorial page staff was obviously upset to see Senators Hillary Clinton, John Edwards, and Barack Obama attack their beloved trade agreement.
The editorial, ironically titled “Trade Distortions,” told readers how NAFTA had provided large benefits to the United States. Then it stated:
“Not that any of the Democratic candidates seem to care, but the impact of NAFTA seems to have been both larger and more positive in Mexico than in the United States. Mexico’s gross domestic product, now more than $875 billion, has more than quadrupled since 1987.”
This one was a headscratcher for two reasons. First, NAFTA took effect in 1994 — why was the Post telling us about Mexico’s growth since 1987?
But this was the less important gaffe in this sentence. Mexico’s GDP “has more than quadrupled?” That is a pretty incredible claim on its face. If GDP quadruples in two decades, it implies an annual growth rate of 7.2 percent. While many developing countries have a brief spurt where they grow at this pace for two or three years, sustaining this sort of growth for two decades is truly extraordinary. China managed to do it, but not many other countries have. Was there another China growth miracle hiding south of the border that had somehow had gone unnoticed?
It turns out there wasn’t. According to the International Monetary Fund, adjusting for inflation, Mexico’s GDP went from 6,564 billion pesos in 1987 to 12,088 billion pesos in 2007.[1] That translates into cumulative growth of 84.2 percent, quite a bit different from the “more than quadrupled” claimed by the Washington Post. Rather than being a near-record-setting growth pace, this translates into a thoroughly mediocre 3.1 percent annual rate of growth.
On a per capita basis, Mexico’s growth trailed growth in the United States, averaging just 1.5 percent annually, compared to 1.9 percent in the United States. That’s not the expected story. Poor countries are supposed to be catching up to rich countries.
So how did the Post get this one so badly wrong? It’s possible that it looked at Mexico’s nominal GDP growth. This measure doesn’t adjust for the effects of inflation. Since Mexico had a very serious problem with inflation over most of this period, its nominal GDP did more than quadruple.
In fact, Mexico’s nominal GDP increased by more than a factor of 50, from 217.6 billion pesos in 1987 to 11,403.3 billion pesos in 2007. That certainly qualifies as “more than quadrupled.”
However, runaway inflation hardly makes a good case for NAFTA. While concerns over inflation have arguably been excessive in recent decades, inflation running well into the double digits is certainly a problem. In any case, higher inflation is hardly an outcome worth boasting about.
Anyhow, whatever the cause of the original error, the really disturbing part of the story is the Post’s refusal to correct it even after I called it to their attention. People view a newspaper like the Post as authoritative. As long as the mistaken numbers on Mexico’s growth appear on the paper’s website, it is possible that readers will find the piece and assume the numbers are correct. This is why serious newspapers append a correction to the bottom of an article or column that includes a major error.
For some reason, the Post has chosen not to acknowledge and correct its error over the last ten years. Let’s hope we don’t have to write a second edition of this piece in 2027.
[1] This uses 2008 constant pesos.
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