I have often joked how when we have a political debate after we watch the candidates stake out various claims and positions, we then see reporters talk about their body language. They tell us who looked confident and sincere and who seemed cautious or in other ways unsteady.
This is infuriating because this is exactly the area in which reporters have no comparative advantage over the people viewing the debate. We all engage in conversations and negotiations with people in our everyday life. Most of us are used to assessing the sincerity and integrity of the people we deal with. When we are watching politicians put forward their case on television we can all judge their sincerity and confidence. There is no particular reason to believe that the reporters giving their commentary can do a better job at this than the rest of the people watching the debate.
On the other hand, the reporters could, in principle, know more about the truth of the politicians’ claims. They could know about the background to their policy proposals, where they have been tried, and the issues that have been raised by various experts. Reporters almost invariably fail to provide this sort of analysis, which would be a useful service to their audience.
Anyhow, we got a full and explicit example of the body language treatment this morning on National Public Radio. Their discussion of the meeting between French President Emmanuel Macron and Donald Trump explicitly focused on the body language between the two leaders and assured us that they have struck up a genuine friendship.
I didn’t have a chance to see the events on television, but let me record my skepticism here. At least we now know for sure the skills required of NPR reporters.
I have often joked how when we have a political debate after we watch the candidates stake out various claims and positions, we then see reporters talk about their body language. They tell us who looked confident and sincere and who seemed cautious or in other ways unsteady.
This is infuriating because this is exactly the area in which reporters have no comparative advantage over the people viewing the debate. We all engage in conversations and negotiations with people in our everyday life. Most of us are used to assessing the sincerity and integrity of the people we deal with. When we are watching politicians put forward their case on television we can all judge their sincerity and confidence. There is no particular reason to believe that the reporters giving their commentary can do a better job at this than the rest of the people watching the debate.
On the other hand, the reporters could, in principle, know more about the truth of the politicians’ claims. They could know about the background to their policy proposals, where they have been tried, and the issues that have been raised by various experts. Reporters almost invariably fail to provide this sort of analysis, which would be a useful service to their audience.
Anyhow, we got a full and explicit example of the body language treatment this morning on National Public Radio. Their discussion of the meeting between French President Emmanuel Macron and Donald Trump explicitly focused on the body language between the two leaders and assured us that they have struck up a genuine friendship.
I didn’t have a chance to see the events on television, but let me record my skepticism here. At least we now know for sure the skills required of NPR reporters.
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Several news outlets have reported that the Congressional Budget Office (CBO) does not accept the Trump administration’s claims that its program will lead to a big surge in growth. It is worth mentioning in reference to this dispute that the “robots will take all the jobs” gang agrees with Trump in this dispute. Many people in the debate are probably not aware of this fact because it requires an understanding of third-grade arithmetic.
Economic growth is the sum of labor force growth and productivity growth. There is not too much dispute about the rate of growth of the labor force over the next decade, since it is mostly due to population growth. Apart from large changes in immigration policy, we can’t do much about the number of working-age people who will be in the U.S. over the next decade.
The main question in projecting economic growth is therefore the rate of productivity growth. CBO essentially projects that the slowdown of the last decade will persist, with productivity growth averaging roughly 1.5 percent annually. The Trump crew is betting on a more rapid pace of productivity growth, as are the robots will take all the jobs gang. After all, robots taking the jobs of workers is pretty much the definition of productivity growth.
So, there are many reasons for mocking Trump and his administration, but if any of the robots will take the jobs gang mock the Trump growth projections, they are showing their ignorance. They agree with Trump’s projections of more rapid growth, they are just too confused about the arithmetic and economics to know it.
Several news outlets have reported that the Congressional Budget Office (CBO) does not accept the Trump administration’s claims that its program will lead to a big surge in growth. It is worth mentioning in reference to this dispute that the “robots will take all the jobs” gang agrees with Trump in this dispute. Many people in the debate are probably not aware of this fact because it requires an understanding of third-grade arithmetic.
Economic growth is the sum of labor force growth and productivity growth. There is not too much dispute about the rate of growth of the labor force over the next decade, since it is mostly due to population growth. Apart from large changes in immigration policy, we can’t do much about the number of working-age people who will be in the U.S. over the next decade.
The main question in projecting economic growth is therefore the rate of productivity growth. CBO essentially projects that the slowdown of the last decade will persist, with productivity growth averaging roughly 1.5 percent annually. The Trump crew is betting on a more rapid pace of productivity growth, as are the robots will take all the jobs gang. After all, robots taking the jobs of workers is pretty much the definition of productivity growth.
So, there are many reasons for mocking Trump and his administration, but if any of the robots will take the jobs gang mock the Trump growth projections, they are showing their ignorance. They agree with Trump’s projections of more rapid growth, they are just too confused about the arithmetic and economics to know it.
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Office of Management and Budget Director Mick Mulvaney had a Wall Street Journal column highlighting the benefits of “MAGAnomics.” The piece can best be described as a combination of Groundhog Day and outright lies.
In terms of Groundhog Day, we have actually tried MAGAnomics twice before and it didn’t work. We had huge cuts in taxes and regulation under both President Reagan and George W. Bush. In neither case, was there any huge uptick in growth and investment. In fact, the Bush years were striking for the weak growth in the economy and especially the labor market. We saw what was at the time the longest period without net job growth since the Great Depression. And of course, his policy of giving finance free rein gave us the housing bubble and the Great Recession.
The story of the 1980s was somewhat better but hardly follows the MAGAnomics script. The economy did bounce back in 1983, following a steep recession in 1981–1982. That is generally what economies do following steep recessions that were not caused by collapsed asset bubbles. Furthermore, the bounceback was based on increased consumption, not investment as the MAGAnomics folks claim. In fact, investment in the late 1980s fell to extraordinarily low levels. It is also worth pointing out that following both tax cuts, the deficit exploded, just as conventional economics predicts.
By contrast, Clinton raised taxes in 1993 and the economy subsequently soared. It would be silly to attribute the strong growth of the 1990s to the Clinton tax increase; other factors like an IT driven productivity boom and the stock bubble were the key factors, but obviously, the tax increase did not prevent strong growth.
The outright lies part stem from the comparison to prior periods’ growth rates. Mulvaney notes that the 2.0 percent growth rate projected for the next decade is markedly lower than the 3.5 percent rate that we had seen for most of the post-World War II era.This comparison doesn’t make sense.
We are now seeing very slow labor force growth due to the retirement of the baby boom cohort and the fact that the secular rise in the female labor force participation rate is largely at an end. MAGAnomics can do nothing about either of these facts. Slower labor force growth translates into slower overall growth.
Mulvaney also complains about government benefits keeping people from working. The idea that large numbers of people aren’t working because of the generosity of welfare benefits shows a startling degree of ignorance. The United States has the least generous welfare state of any wealthy country, yet we also have among the lowest labor force participation rates. The idea that we will get any substantial boost to the labor force from gutting benefits further is absurd on its face.
Mulvaney apparently missed the fact that energy prices have plummeted in the last three years. Oil had been over $100 a barrel, today it is less than $50. While it is always possible that it could fall still further, any boost to the economy from further declines will be trivial compared to what we have seen already. It would be amazing if Mulvaney was ignorant of the recent path in energy prices.
In short, there is nothing here at all. Mulvaney has given us absolutely zero reason that Trump’s policies will lead to anything other than larger deficits, fewer people with health care, more dangerous workplaces, and a dirtier environment.
Office of Management and Budget Director Mick Mulvaney had a Wall Street Journal column highlighting the benefits of “MAGAnomics.” The piece can best be described as a combination of Groundhog Day and outright lies.
In terms of Groundhog Day, we have actually tried MAGAnomics twice before and it didn’t work. We had huge cuts in taxes and regulation under both President Reagan and George W. Bush. In neither case, was there any huge uptick in growth and investment. In fact, the Bush years were striking for the weak growth in the economy and especially the labor market. We saw what was at the time the longest period without net job growth since the Great Depression. And of course, his policy of giving finance free rein gave us the housing bubble and the Great Recession.
The story of the 1980s was somewhat better but hardly follows the MAGAnomics script. The economy did bounce back in 1983, following a steep recession in 1981–1982. That is generally what economies do following steep recessions that were not caused by collapsed asset bubbles. Furthermore, the bounceback was based on increased consumption, not investment as the MAGAnomics folks claim. In fact, investment in the late 1980s fell to extraordinarily low levels. It is also worth pointing out that following both tax cuts, the deficit exploded, just as conventional economics predicts.
By contrast, Clinton raised taxes in 1993 and the economy subsequently soared. It would be silly to attribute the strong growth of the 1990s to the Clinton tax increase; other factors like an IT driven productivity boom and the stock bubble were the key factors, but obviously, the tax increase did not prevent strong growth.
The outright lies part stem from the comparison to prior periods’ growth rates. Mulvaney notes that the 2.0 percent growth rate projected for the next decade is markedly lower than the 3.5 percent rate that we had seen for most of the post-World War II era.This comparison doesn’t make sense.
We are now seeing very slow labor force growth due to the retirement of the baby boom cohort and the fact that the secular rise in the female labor force participation rate is largely at an end. MAGAnomics can do nothing about either of these facts. Slower labor force growth translates into slower overall growth.
Mulvaney also complains about government benefits keeping people from working. The idea that large numbers of people aren’t working because of the generosity of welfare benefits shows a startling degree of ignorance. The United States has the least generous welfare state of any wealthy country, yet we also have among the lowest labor force participation rates. The idea that we will get any substantial boost to the labor force from gutting benefits further is absurd on its face.
Mulvaney apparently missed the fact that energy prices have plummeted in the last three years. Oil had been over $100 a barrel, today it is less than $50. While it is always possible that it could fall still further, any boost to the economy from further declines will be trivial compared to what we have seen already. It would be amazing if Mulvaney was ignorant of the recent path in energy prices.
In short, there is nothing here at all. Mulvaney has given us absolutely zero reason that Trump’s policies will lead to anything other than larger deficits, fewer people with health care, more dangerous workplaces, and a dirtier environment.
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Aaron Carroll had an interesting Upshot piece comparing the merits of Medicaid and private insurance. It focuses on the fact that Medicaid is largely free for beneficiaries, while private insurance typically has substantial co-pays and deductibles. The piece points out that these fees can provide a substantial disincentive for getting health care, especially for lower income people.
While this might be a good way to save the system money if it discourages unnecessary care, which was a major reason the Affordable Care Act encouraged such fees, research shows that people also put off necessary care as a result of such fees. As a result, private insurance may end up leading to worse health outcomes than Medicaid for many low- and moderate-income people.
While this discussion is useful, there is another aspect to the fees that it ignores. Insurers often make mistakes which require patients to spend many extra hours pursuing claims. In many cases, they may not be compensated for care which should be covered if they don’t spend the necessary time. Even if they do get compensated, this is a needless waste of people’s time which is not factored into standard analysis on health care costs.
While it is always dangerous to generalize from very personal experiences, my guess is that my wife and I had to follow up in some manner on at least 20 percent of our claims. In some cases, this could be a single phone call, in other cases it could mean extensive back and forth between the provider and insurer, requiring multiple documents and authorizations. It is hard to believe that our experience is all that atypical or that we are especially bad at filling out forms. (My wife is also an economist who is pretty good at dealing with forms and numbers.)
Anyhow, this is an aspect of co-pays and deductibles that can be especially annoying to patients. Remember, people are most likely to be dealing with large numbers of claims when they are suffering from a health problem. This is not the best time to add another problem to their life.
Aaron Carroll had an interesting Upshot piece comparing the merits of Medicaid and private insurance. It focuses on the fact that Medicaid is largely free for beneficiaries, while private insurance typically has substantial co-pays and deductibles. The piece points out that these fees can provide a substantial disincentive for getting health care, especially for lower income people.
While this might be a good way to save the system money if it discourages unnecessary care, which was a major reason the Affordable Care Act encouraged such fees, research shows that people also put off necessary care as a result of such fees. As a result, private insurance may end up leading to worse health outcomes than Medicaid for many low- and moderate-income people.
While this discussion is useful, there is another aspect to the fees that it ignores. Insurers often make mistakes which require patients to spend many extra hours pursuing claims. In many cases, they may not be compensated for care which should be covered if they don’t spend the necessary time. Even if they do get compensated, this is a needless waste of people’s time which is not factored into standard analysis on health care costs.
While it is always dangerous to generalize from very personal experiences, my guess is that my wife and I had to follow up in some manner on at least 20 percent of our claims. In some cases, this could be a single phone call, in other cases it could mean extensive back and forth between the provider and insurer, requiring multiple documents and authorizations. It is hard to believe that our experience is all that atypical or that we are especially bad at filling out forms. (My wife is also an economist who is pretty good at dealing with forms and numbers.)
Anyhow, this is an aspect of co-pays and deductibles that can be especially annoying to patients. Remember, people are most likely to be dealing with large numbers of claims when they are suffering from a health problem. This is not the best time to add another problem to their life.
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Senator Toomey is apparently too young to remember the financial crisis that resulted from the collapse of the housing bubble. He told the Washington Post that he thinks Medicare cost increases will lead to a financial crisis:
“‘It’s a guaranteed financial crisis if we don’t do something about our entitlement programs,’ said Sen. Patrick J. Toomey (R-Pa.), who has pushed for indexing Medicaid to a lower inflation rate. ‘It’s not a question of whether that happens, it’s just a question of when, and how devastating, that is.'”
While it is possible to see how higher Medicare costs would lead to larger budget deficits, if Toomey and his Republican colleagues decide never to raise taxes or cut other spending, there is no obvious way that this leads to a financial crisis. The last crisis came about because a housing bubble was fueled by loans. When housing prices collapsed, trillions of dollars in loans went bad. While this is a fairly straightforward story, it is very difficult to see how rising Medicare costs are more likely to lead to a financial crisis than a Superbowl victory by the Cleveland Browns.
It might have been helpful to point out to readers that the Senator doesn’t appear to know what he is talking about.
Senator Toomey is apparently too young to remember the financial crisis that resulted from the collapse of the housing bubble. He told the Washington Post that he thinks Medicare cost increases will lead to a financial crisis:
“‘It’s a guaranteed financial crisis if we don’t do something about our entitlement programs,’ said Sen. Patrick J. Toomey (R-Pa.), who has pushed for indexing Medicaid to a lower inflation rate. ‘It’s not a question of whether that happens, it’s just a question of when, and how devastating, that is.'”
While it is possible to see how higher Medicare costs would lead to larger budget deficits, if Toomey and his Republican colleagues decide never to raise taxes or cut other spending, there is no obvious way that this leads to a financial crisis. The last crisis came about because a housing bubble was fueled by loans. When housing prices collapsed, trillions of dollars in loans went bad. While this is a fairly straightforward story, it is very difficult to see how rising Medicare costs are more likely to lead to a financial crisis than a Superbowl victory by the Cleveland Browns.
It might have been helpful to point out to readers that the Senator doesn’t appear to know what he is talking about.
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The NYT is again spreading the absurd myth that Paul Ryan and other Republicans want a free market in health care. While it is very helpful to the Republicans to imply that they are trying to advance some grand principle, as opposed to just giving money to rich people, it is a lie on a par with climate denialism.
There are no government-granted patent monopolies in a free market. As a result of these government granted monopolies, we will pay more than $440 billion for prescription drugs this year. These drugs would likely cost less than $80 billion in a free market. The difference of more than $360 billion a year is a bit less than 2 percent of GDP more than seven times as much money as is at stake in the Republicans proposed Medicaid cuts. (Those cuts cover a decade, this is a single year figure.)
The same story applies to medical equipment. MRIs are cheap without patent protection.
It is possible to argue for the merits of government granted monopolies (I argue against them in chapter 5 of Rigged [it’s free]), but it is not possible to deny that these monopolies are a government policy, not the free market. Paul Ryan has never indicated any opposition to government granted patent monopolies.
Similarly, we pay our doctors twice as much as their counterparts in other rich countries, costing us more than $80 billion a year in higher health care costs. This is due to the protectionist barriers enjoyed by our doctors, which protect them from both foreign and domestic competition. (This is covered in chapter 7 of Rigged.) Paul Ryan has never indicated a desire to remove the protectionist barriers that allow many doctors to reach the top one percent of income earners.
The government also privileges insurance contracts in many ways compared with other contracts. For example, with insurance contracts not disclosing relevant information can often void the contract. By contrast, with most contracts, the parties to the contract are responsible for learning relevant information themselves. Ryan has not indicated any desire to reverse this privileged position for insurance contracts.
It is very generous of the NYT to pretend that the Republicans are motivated by some sort of principle in their efforts to repeal the ACA, but the claim is absurd on its face. It does not deserve to be treated seriously, the repeal is about giving more money to rich people, end of story.
The NYT is again spreading the absurd myth that Paul Ryan and other Republicans want a free market in health care. While it is very helpful to the Republicans to imply that they are trying to advance some grand principle, as opposed to just giving money to rich people, it is a lie on a par with climate denialism.
There are no government-granted patent monopolies in a free market. As a result of these government granted monopolies, we will pay more than $440 billion for prescription drugs this year. These drugs would likely cost less than $80 billion in a free market. The difference of more than $360 billion a year is a bit less than 2 percent of GDP more than seven times as much money as is at stake in the Republicans proposed Medicaid cuts. (Those cuts cover a decade, this is a single year figure.)
The same story applies to medical equipment. MRIs are cheap without patent protection.
It is possible to argue for the merits of government granted monopolies (I argue against them in chapter 5 of Rigged [it’s free]), but it is not possible to deny that these monopolies are a government policy, not the free market. Paul Ryan has never indicated any opposition to government granted patent monopolies.
Similarly, we pay our doctors twice as much as their counterparts in other rich countries, costing us more than $80 billion a year in higher health care costs. This is due to the protectionist barriers enjoyed by our doctors, which protect them from both foreign and domestic competition. (This is covered in chapter 7 of Rigged.) Paul Ryan has never indicated a desire to remove the protectionist barriers that allow many doctors to reach the top one percent of income earners.
The government also privileges insurance contracts in many ways compared with other contracts. For example, with insurance contracts not disclosing relevant information can often void the contract. By contrast, with most contracts, the parties to the contract are responsible for learning relevant information themselves. Ryan has not indicated any desire to reverse this privileged position for insurance contracts.
It is very generous of the NYT to pretend that the Republicans are motivated by some sort of principle in their efforts to repeal the ACA, but the claim is absurd on its face. It does not deserve to be treated seriously, the repeal is about giving more money to rich people, end of story.
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Folks who passed their intro econ class know that it is net exports (exports minus imports) that affect output and employment. Not exports alone. Nonetheless, we find people like Washington Post columnist Robert Samuelson telling readers that Trump’s decision to pull out of the Trans-Pacific Partnership (TPP) might undermine his agenda because “being outside these agreements [a TPP without the U.S. and European Union-Japan trade deal) would weaken U.S. exports.”
Since it is not exports that matter for output and employment, but net exports, it is not clear that Trump should be worried. The United States International Trade Commission (USITC) projected that the TPP would lead to a net loss of manufacturing jobs, meaning that it would increase imports more than exports. Since Trump made increasing manufacturing employment a centerpiece of his campaign, it doesn’t seem unreasonable that he would oppose a deal that is projected to reduce manufacturing employment.
It is also important to realize that the USITC projections rule out the possibility that some of the countries in the agreement may deliberately keep down the value of their currency to increase their trade surpluses, as they have done in the past. The TPP would reduce the ability of the United States to take measures to punish such behavior.
It is also worth noting that contrary to what Samuelson implies, the U.S. is generally helped, not hurt, when our trading partners remove barriers between them. If an EU-Japan trade deal actually leads to stronger growth for both sides, these countries will be better trading partners for the United States. (It is possible that the increased protectionism in the pact, associated with longer and stronger patent and copyright and related protections may do more to slow growth than the liberalization measures do to increase it.)
Folks who passed their intro econ class know that it is net exports (exports minus imports) that affect output and employment. Not exports alone. Nonetheless, we find people like Washington Post columnist Robert Samuelson telling readers that Trump’s decision to pull out of the Trans-Pacific Partnership (TPP) might undermine his agenda because “being outside these agreements [a TPP without the U.S. and European Union-Japan trade deal) would weaken U.S. exports.”
Since it is not exports that matter for output and employment, but net exports, it is not clear that Trump should be worried. The United States International Trade Commission (USITC) projected that the TPP would lead to a net loss of manufacturing jobs, meaning that it would increase imports more than exports. Since Trump made increasing manufacturing employment a centerpiece of his campaign, it doesn’t seem unreasonable that he would oppose a deal that is projected to reduce manufacturing employment.
It is also important to realize that the USITC projections rule out the possibility that some of the countries in the agreement may deliberately keep down the value of their currency to increase their trade surpluses, as they have done in the past. The TPP would reduce the ability of the United States to take measures to punish such behavior.
It is also worth noting that contrary to what Samuelson implies, the U.S. is generally helped, not hurt, when our trading partners remove barriers between them. If an EU-Japan trade deal actually leads to stronger growth for both sides, these countries will be better trading partners for the United States. (It is possible that the increased protectionism in the pact, associated with longer and stronger patent and copyright and related protections may do more to slow growth than the liberalization measures do to increase it.)
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In order to reduce speculation in its housing market, the city of Vancouver imposed a vacant property tax. People would be assessed an additional tax if a house or apartment was left vacant for a long period of time. (Yes, this is one of my pet ideas, so it makes my day to see Vancouver moving ahead with the vacancy tax.)
In addition to reducing speculation it might be expected that the tax would reduce rents by making more units available. But CBC says it ain’t so, there will be more supply but no change in prices. Interesting how things work up north.
In order to reduce speculation in its housing market, the city of Vancouver imposed a vacant property tax. People would be assessed an additional tax if a house or apartment was left vacant for a long period of time. (Yes, this is one of my pet ideas, so it makes my day to see Vancouver moving ahead with the vacancy tax.)
In addition to reducing speculation it might be expected that the tax would reduce rents by making more units available. But CBC says it ain’t so, there will be more supply but no change in prices. Interesting how things work up north.
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