It’s good to see the NYT has diverse voices on economic issues. In his “Economic Scene” column on the economy’s supposed labor shortage, Porter argued that “raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach.” Three days ago, the NYT had an editorial arguing strongly for increased protectionism in the form of stronger and longer copyright and patent protections. These forms of protection not only raise prices and slow growth, but they redistribute income upward, taking money from most of the population and giving it to those who stand to gain from patent and copyright protection.
It is worth noting that the assertion that the economy is now or will in the near future be suffering from a labor shortage seems dubious. Employment rates for prime-age men at all levels of educational attainment are still below their 2000 rate. That seems hard to reconcile with the view that we have a labor shortage. In the same vein, the percentage of unemployment due to people voluntarily quitting their jobs is still relatively low, suggesting that workers do not feel very secure about their labor market prospects. And, workers are still far from recovering their share of output, with the profit share still well above the pre-recession level.
For these reasons, we should be skeptical about the existence of a labor shortage. It is also worth noting that a labor shortage is 180 degrees at odds with the often asserted problem that the robots will take all the jobs.
It’s good to see the NYT has diverse voices on economic issues. In his “Economic Scene” column on the economy’s supposed labor shortage, Porter argued that “raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach.” Three days ago, the NYT had an editorial arguing strongly for increased protectionism in the form of stronger and longer copyright and patent protections. These forms of protection not only raise prices and slow growth, but they redistribute income upward, taking money from most of the population and giving it to those who stand to gain from patent and copyright protection.
It is worth noting that the assertion that the economy is now or will in the near future be suffering from a labor shortage seems dubious. Employment rates for prime-age men at all levels of educational attainment are still below their 2000 rate. That seems hard to reconcile with the view that we have a labor shortage. In the same vein, the percentage of unemployment due to people voluntarily quitting their jobs is still relatively low, suggesting that workers do not feel very secure about their labor market prospects. And, workers are still far from recovering their share of output, with the profit share still well above the pre-recession level.
For these reasons, we should be skeptical about the existence of a labor shortage. It is also worth noting that a labor shortage is 180 degrees at odds with the often asserted problem that the robots will take all the jobs.
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Economists usually argue that it’s best to tax the things you want discourage, like cigarettes, alcohol, and gasoline, not things you want to encourage, like work. That is why it is striking that that the Washington Post could not find one economist who thought that a plan in London to tax vacant housing units is a good idea.
The only expert cited in the piece argued that the tax would have little effect on the housing market because the rich would not care if their property taxes were doubled or tripled, they would still leave units vacant. (The piece repeatedly refers to “experts” even though only one is cited by name.) This answer is striking for three reasons.
Whenever tax increases on the rich are proposed, the Washington Post and other newspapers are usually filled with assertions from economists about how it will cause to them work less, move, or take other steps to avoid the tax. Apparently for some reason a tax on vacant property is different from other taxes; the rich don’t mind paying it.
The second reason the comment is striking is that it suggests a relatively costless way for the city of London to raise money. If doubling or tripling the property tax for vacant properties won’t affect the behavior of the rich then maybe they could quadruple or quintuple the tax. Hey, if the rich don’t mind paying a tax on vacant property, why not charge them ten or twenty times the regular property tax? They won’t even notice.
The third reason is that the comment comes just before a statement telling us most vacant properties in London are owned by middle-class people, not rich people:
“Most of London’s 20,000 empty units aren’t owned by the super-rich, but by the middle and lower rungs — and studies show that most homes are empty because they are the subjects of inheritance tussles or uninhabitable or in need of repairs.”
Taxing these people on vacant units might be just the incentive they need to resolve inheritance disputes or to sell a vacant property to someone who could afford to make the repairs for it to be habitable. Of course, this works from the assumption that we actually want less vacant property.
In arguing the case against the tax, the Post even found someone was happy to live next to a building with many vacant units:
“Plus, there are upsides to living next to absentee neighbors.
“‘I would shudder to imagine if this was running at 80 percent occupancy,’ said Suruchi Shukla, a 38-year-old consultant, with her head cranked skyward at the building.”
So there you have it: a tax on vacant property wouldn’t reduce the number of vacant units, and it would be a bad thing if it did. And remember folks, this is supposed to be a news story, not an opinion piece.
Economists usually argue that it’s best to tax the things you want discourage, like cigarettes, alcohol, and gasoline, not things you want to encourage, like work. That is why it is striking that that the Washington Post could not find one economist who thought that a plan in London to tax vacant housing units is a good idea.
The only expert cited in the piece argued that the tax would have little effect on the housing market because the rich would not care if their property taxes were doubled or tripled, they would still leave units vacant. (The piece repeatedly refers to “experts” even though only one is cited by name.) This answer is striking for three reasons.
Whenever tax increases on the rich are proposed, the Washington Post and other newspapers are usually filled with assertions from economists about how it will cause to them work less, move, or take other steps to avoid the tax. Apparently for some reason a tax on vacant property is different from other taxes; the rich don’t mind paying it.
The second reason the comment is striking is that it suggests a relatively costless way for the city of London to raise money. If doubling or tripling the property tax for vacant properties won’t affect the behavior of the rich then maybe they could quadruple or quintuple the tax. Hey, if the rich don’t mind paying a tax on vacant property, why not charge them ten or twenty times the regular property tax? They won’t even notice.
The third reason is that the comment comes just before a statement telling us most vacant properties in London are owned by middle-class people, not rich people:
“Most of London’s 20,000 empty units aren’t owned by the super-rich, but by the middle and lower rungs — and studies show that most homes are empty because they are the subjects of inheritance tussles or uninhabitable or in need of repairs.”
Taxing these people on vacant units might be just the incentive they need to resolve inheritance disputes or to sell a vacant property to someone who could afford to make the repairs for it to be habitable. Of course, this works from the assumption that we actually want less vacant property.
In arguing the case against the tax, the Post even found someone was happy to live next to a building with many vacant units:
“Plus, there are upsides to living next to absentee neighbors.
“‘I would shudder to imagine if this was running at 80 percent occupancy,’ said Suruchi Shukla, a 38-year-old consultant, with her head cranked skyward at the building.”
So there you have it: a tax on vacant property wouldn’t reduce the number of vacant units, and it would be a bad thing if it did. And remember folks, this is supposed to be a news story, not an opinion piece.
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The NYT had an article on the most recent Republican plan to repeal the Affordable Care Act (ACA). It included a quote from Senator Bill Cassady, a co-sponsor of the bill:
“‘Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states’ — California, New York, Massachusetts and Maryland, Mr. Cassidy said. ‘That is frankly not fair.'”
If just four states getting 37 percent of the money sounds unfair to you, it might be worth keeping in mind that these four states account for more than a quarter of the country’s population and GDP. That still means that they are getting a disproportionate share of the money from the ACA, but it is not quite the same as if four small or average size states were getting 37 percent of the money.
It is also worth remembering that ACA spending accounts for roughly 1.5 percent of the total budget. Getting a disproportionate share of 1.5 percent of the total budget doesn’t seem like all that big a deal, after all southern states have historically gotten a grossly disproportionate share of the military budget.
Then we have to consider the fact that many states don’t get much money from the ACA by choice. Specifically, they have chosen not to expand Medicaid to provide more of their residents with health care insurance. They also have not done much to publicize the exchanges, which would have sent more money to their states through subsidies to moderate income people.
So this is the grave injustice that Senator Cassidy is looking to remedy and to do so he wants to have 30 million plus people lose their health care insurance, and to allow insurers to again discriminate against people based on pre-existing conditions. That may be unfortunate, but at least California, New York, Massachusetts and Maryland won’t be getting a disproportionate share of ACA spending.
The NYT had an article on the most recent Republican plan to repeal the Affordable Care Act (ACA). It included a quote from Senator Bill Cassady, a co-sponsor of the bill:
“‘Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states’ — California, New York, Massachusetts and Maryland, Mr. Cassidy said. ‘That is frankly not fair.'”
If just four states getting 37 percent of the money sounds unfair to you, it might be worth keeping in mind that these four states account for more than a quarter of the country’s population and GDP. That still means that they are getting a disproportionate share of the money from the ACA, but it is not quite the same as if four small or average size states were getting 37 percent of the money.
It is also worth remembering that ACA spending accounts for roughly 1.5 percent of the total budget. Getting a disproportionate share of 1.5 percent of the total budget doesn’t seem like all that big a deal, after all southern states have historically gotten a grossly disproportionate share of the military budget.
Then we have to consider the fact that many states don’t get much money from the ACA by choice. Specifically, they have chosen not to expand Medicaid to provide more of their residents with health care insurance. They also have not done much to publicize the exchanges, which would have sent more money to their states through subsidies to moderate income people.
So this is the grave injustice that Senator Cassidy is looking to remedy and to do so he wants to have 30 million plus people lose their health care insurance, and to allow insurers to again discriminate against people based on pre-existing conditions. That may be unfortunate, but at least California, New York, Massachusetts and Maryland won’t be getting a disproportionate share of ACA spending.
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Of course, the paper did not actually warn of the cheap trick the Republicans are considering. It just mentioned it in passing as though it was a serious policy proposal:
“House Republicans are considering a key change to 401(k)s as part of their tax overhaul package: Taxing the money that workers place in their savings plans upfront instead of years later when they take it out in retirement.”
The only possible rationale for taxing money when it is put into a 401(k) account rather than when it is pulled out is to change the timing of tax collections since there will be little net change in revenue over the long-term. By taxing the payments into the system, the government will collect more revenue during the 10-year horizon over which budget projections are made. However, this will be almost completely offset by lower tax collections in later years.
As policy, this makes zero sense. The point of 401(k)s is supposed to be encouraging people to save. There is much research showing that the prospect of an immediate tax saving gives strong incentive to save. This means that eliminating the immediate tax deduction will almost certainly mean less savings in 401(k)s.
There is the advantage that this change will appear to offset the lost revenue from Republican tax cuts for rich people. Unfortunately, most Post readers might not be aware of this rationale for the policy change.
Of course, the paper did not actually warn of the cheap trick the Republicans are considering. It just mentioned it in passing as though it was a serious policy proposal:
“House Republicans are considering a key change to 401(k)s as part of their tax overhaul package: Taxing the money that workers place in their savings plans upfront instead of years later when they take it out in retirement.”
The only possible rationale for taxing money when it is put into a 401(k) account rather than when it is pulled out is to change the timing of tax collections since there will be little net change in revenue over the long-term. By taxing the payments into the system, the government will collect more revenue during the 10-year horizon over which budget projections are made. However, this will be almost completely offset by lower tax collections in later years.
As policy, this makes zero sense. The point of 401(k)s is supposed to be encouraging people to save. There is much research showing that the prospect of an immediate tax saving gives strong incentive to save. This means that eliminating the immediate tax deduction will almost certainly mean less savings in 401(k)s.
There is the advantage that this change will appear to offset the lost revenue from Republican tax cuts for rich people. Unfortunately, most Post readers might not be aware of this rationale for the policy change.
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We all know how hard it is for people with advanced degrees to compete in the global economy, but how much government help do we have to give them? Apparently, whatever we give them in strong patent and copyright protections (yes folks, this is protectionism, no matter how much you like it) is not enough.
In an editorial on relations with China, the NYT offers this encouraging (to the rich) pronouncement:
“On intellectual property, now that China is putting energy into developing its own technology instead of just stealing America’s, the two could work together on stronger protections.”
Isn’t that great? We can redistribute more money to people who benefit from patent and copyright monopolies and then say it’s just unfortunate that technology leads to an upward redistribution of income. And most of our intellectual class are sufficiently s**t-for-brains to treat that as a serious argument.
And yes folks, there are alternatives to patent and copyright monopolies for financing research and creative work. But, as we all know, intellectuals have a hard time dealing with new ideas.
We all know how hard it is for people with advanced degrees to compete in the global economy, but how much government help do we have to give them? Apparently, whatever we give them in strong patent and copyright protections (yes folks, this is protectionism, no matter how much you like it) is not enough.
In an editorial on relations with China, the NYT offers this encouraging (to the rich) pronouncement:
“On intellectual property, now that China is putting energy into developing its own technology instead of just stealing America’s, the two could work together on stronger protections.”
Isn’t that great? We can redistribute more money to people who benefit from patent and copyright monopolies and then say it’s just unfortunate that technology leads to an upward redistribution of income. And most of our intellectual class are sufficiently s**t-for-brains to treat that as a serious argument.
And yes folks, there are alternatives to patent and copyright monopolies for financing research and creative work. But, as we all know, intellectuals have a hard time dealing with new ideas.
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Yeah, what else is new. After all, no one thinks that a conservative columnist writing for the country’s most important newspaper should have any clue about the topics they cover.
Brooks uses his column today to tell us that workers are getting their share of the economic pie and the real problem is productivity growth.
“The problem of the middle-class squeeze, in short, may not be with how the fruits of productivity are distributed, but the fact that there isn’t much productivity growth at all. It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.”
Sorry Mr. Brooks, but the numbers don’t agree with you. Here’s the story on average hourly earnings for production and non-supervisory workers since 2007. This is a good proxy for the median wage since it excludes high-end workers like doctors, Wall Street types, and CEOs.
Source: Bureau of Labor Statistics.
After rising by less than 2.0 percent between 2007 and 2013, real wages have started to grow at a respectable pace in the last four years. Still, they are just 8.0 percent above their 2007 level. By contrast, productivity has risen by 13.7 percent over this period. That’s a difference of 5.7 percentage points over the last decade.
For a person earning $40,000 a year, the loss due to the gap between productivity growth and wage growth is equivalent to a tax increase of $2,280 a year. Would Brooks try to tell readers that a tax increase of this magnitude is small change? If we go further back to 1980, when inequality first started to take off, the gap would be closer to 40 percentage points. Anyhow, it’s cute that Brooks wants to tell us not to think about all the money going to rich people and just concentrate on productivity growth, but this stuff is too silly even for children’s games.
There, however, is one point here worth noting. As unemployment has fallen, workers have been seeing their share of gains from productivity growth. This is a huge deal, which points to the importance of Federal Reserve Board policy.
There were many economists who wanted the Fed to take a tighter stance on monetary policy and keep the unemployment rate from falling as low as it has. The decision by the Fed to be relatively slow in raising interest rates has not only allowed millions of additional workers to get jobs, it has also meant higher pay for those who were already working. This makes an enormous difference to the country’s workers, but don’t expect to see anything about it in a David Brooks column.
Yeah, what else is new. After all, no one thinks that a conservative columnist writing for the country’s most important newspaper should have any clue about the topics they cover.
Brooks uses his column today to tell us that workers are getting their share of the economic pie and the real problem is productivity growth.
“The problem of the middle-class squeeze, in short, may not be with how the fruits of productivity are distributed, but the fact that there isn’t much productivity growth at all. It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.”
Sorry Mr. Brooks, but the numbers don’t agree with you. Here’s the story on average hourly earnings for production and non-supervisory workers since 2007. This is a good proxy for the median wage since it excludes high-end workers like doctors, Wall Street types, and CEOs.
Source: Bureau of Labor Statistics.
After rising by less than 2.0 percent between 2007 and 2013, real wages have started to grow at a respectable pace in the last four years. Still, they are just 8.0 percent above their 2007 level. By contrast, productivity has risen by 13.7 percent over this period. That’s a difference of 5.7 percentage points over the last decade.
For a person earning $40,000 a year, the loss due to the gap between productivity growth and wage growth is equivalent to a tax increase of $2,280 a year. Would Brooks try to tell readers that a tax increase of this magnitude is small change? If we go further back to 1980, when inequality first started to take off, the gap would be closer to 40 percentage points. Anyhow, it’s cute that Brooks wants to tell us not to think about all the money going to rich people and just concentrate on productivity growth, but this stuff is too silly even for children’s games.
There, however, is one point here worth noting. As unemployment has fallen, workers have been seeing their share of gains from productivity growth. This is a huge deal, which points to the importance of Federal Reserve Board policy.
There were many economists who wanted the Fed to take a tighter stance on monetary policy and keep the unemployment rate from falling as low as it has. The decision by the Fed to be relatively slow in raising interest rates has not only allowed millions of additional workers to get jobs, it has also meant higher pay for those who were already working. This makes an enormous difference to the country’s workers, but don’t expect to see anything about it in a David Brooks column.
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Morning Edition had a segment on efforts to counter the Trump administration’s proposal to cut foreign aid, including money going to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. The segment featured a comment from Bill Gates, whose foundation also supports this fund.
Gates noted the lack of support for foreign aid and attributed it to the media’s tendency to highlight failures, where money is poorly spent or stolen, as opposed to the success stories. While there is undoubtedly some truth to this argument, the more likely problem is the fratboy reporting on budget issues that gives the audience zero context.
In the case of the Global Fund, when people hear about it they are likely to hear that the U.S. will spend up to $4.3 billion this year. This might lead people to think that we are devoting a substantial share of the budget to this fund, at the expense of other programs and/or raising people’s taxes.
In fact, this sum is roughly to 0.1 percent of the budget, it comes to roughly $13 per person for everyone in the country. For another comparison, it is roughly 36 times the excess cost (the amount paid beyond what it cost to protect a normal president) of Donald Trump’s secret service protection. In other words, it would not be the reason that people are paying taxes they consider high.
Polls consistently show the public grossly overestimates the share of the budget going to foreign aid, with median estimates in the range of 25 to 30 percent of the budget, when the total is less than 1.0 percent, even when being very generous about what counts as aid. This is likely due at least in part to the fratboy reporting on aid, which gives people no information whatsoever.
It is amazing that National Public Radio, the New York Times, and other leading news outlets continue the bizarre practice of reporting large numbers without context, even when everyone knows it is not providing information to the vast majority of their audience. It is a very simple matter to express a budget number as a share of the total budget or to use some other comparison that would give it meaning to listeners and readers. However, news outlets refuse to do this.
They instead engage in mindless fratboy reporting where they carry through the ritual of giving a large number that means absolutely nothing to the people who see it, and then pretend they have done their job. This is a major reason people are hostile to programs like foreign aid, TANF, food stamps and other programs that benefit the poor here and elsewhere.
Yes, I know many people are racist and hate these programs for that reason. But many people who are not especially racist (i.e. they vote for people like Hillary Clinton) also believe that 30 percent of our budget goes to foreign aid or TANF. If these programs actually did cost that much much money, there would be good reasons for not supporting them, since they don’t have that much to show.
Morning Edition had a segment on efforts to counter the Trump administration’s proposal to cut foreign aid, including money going to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. The segment featured a comment from Bill Gates, whose foundation also supports this fund.
Gates noted the lack of support for foreign aid and attributed it to the media’s tendency to highlight failures, where money is poorly spent or stolen, as opposed to the success stories. While there is undoubtedly some truth to this argument, the more likely problem is the fratboy reporting on budget issues that gives the audience zero context.
In the case of the Global Fund, when people hear about it they are likely to hear that the U.S. will spend up to $4.3 billion this year. This might lead people to think that we are devoting a substantial share of the budget to this fund, at the expense of other programs and/or raising people’s taxes.
In fact, this sum is roughly to 0.1 percent of the budget, it comes to roughly $13 per person for everyone in the country. For another comparison, it is roughly 36 times the excess cost (the amount paid beyond what it cost to protect a normal president) of Donald Trump’s secret service protection. In other words, it would not be the reason that people are paying taxes they consider high.
Polls consistently show the public grossly overestimates the share of the budget going to foreign aid, with median estimates in the range of 25 to 30 percent of the budget, when the total is less than 1.0 percent, even when being very generous about what counts as aid. This is likely due at least in part to the fratboy reporting on aid, which gives people no information whatsoever.
It is amazing that National Public Radio, the New York Times, and other leading news outlets continue the bizarre practice of reporting large numbers without context, even when everyone knows it is not providing information to the vast majority of their audience. It is a very simple matter to express a budget number as a share of the total budget or to use some other comparison that would give it meaning to listeners and readers. However, news outlets refuse to do this.
They instead engage in mindless fratboy reporting where they carry through the ritual of giving a large number that means absolutely nothing to the people who see it, and then pretend they have done their job. This is a major reason people are hostile to programs like foreign aid, TANF, food stamps and other programs that benefit the poor here and elsewhere.
Yes, I know many people are racist and hate these programs for that reason. But many people who are not especially racist (i.e. they vote for people like Hillary Clinton) also believe that 30 percent of our budget goes to foreign aid or TANF. If these programs actually did cost that much much money, there would be good reasons for not supporting them, since they don’t have that much to show.
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The NYT had a piece on prices being charged by drug companies for new types of treatment for cancer, which can run as high as $1 million a year. While the piece noted the argument of one industry critic, Dr. Aaron Kesselheim, that we don’t pay firefighters when they show up at a fire or based on how many lives they save, it didn’t carry through the logic of this point.
The alternative implied by Dr. Kesselheim’s remark is that we could pay for the research upfront, as we already do to some extent with funding for the National Institutes of Health and the Orphan Drug Tax Credit. If the government paid for research upfront, then in nearly all cases the price of treatment would be trivial, since the cost of manufacturing and delivering the drug is rarely very high. It would have been worth presenting this alternative more clearly in the piece.
The NYT had a piece on prices being charged by drug companies for new types of treatment for cancer, which can run as high as $1 million a year. While the piece noted the argument of one industry critic, Dr. Aaron Kesselheim, that we don’t pay firefighters when they show up at a fire or based on how many lives they save, it didn’t carry through the logic of this point.
The alternative implied by Dr. Kesselheim’s remark is that we could pay for the research upfront, as we already do to some extent with funding for the National Institutes of Health and the Orphan Drug Tax Credit. If the government paid for research upfront, then in nearly all cases the price of treatment would be trivial, since the cost of manufacturing and delivering the drug is rarely very high. It would have been worth presenting this alternative more clearly in the piece.
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