David Callahan had an interesting NYT column on the philanthropical efforts of the latest cohort of the newly rich. The piece makes the important point that people like Bill Gates, the Walton family, and Mark Zuckerberg often use their givings to push their specific political agenda. As Callahan points out, these contributions involve a large amount of taxpayer dollars, these very rich people are getting their taxes reduced by roughly 40 cents for every dollar they give. This means, in effect, that Gates, the Waltons, Zuckerberg and the rest are effectively getting taxpayers to put up a large amount of money to support their political agenda in important areas of public policy.
There are a couple of additional points worth adding on this issue. First, these charitable efforts likely have advanced these billionaires in their efforts to get ever richer. This is especially likely to be the case with Bill Gates where efforts to establish himself as a great humanitarian likely discouraged efforts to take more actions against his company’s near monopoly in the computer operating system market. (Also, a program officer in the Gates Foundation once once told me that they would not support any work questioning the usefulness of patent support for drug research because of Gates’ dependence on intellectual property protections.)
The other point is that the foundations themselves help to contribute to inequality with the outsized paychecks given to their top executives. It is common for these people to get salaries at or above $1 million a year. (This is discussed in chapter 6 of Riggged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer [it’s free.])
It would be possible to require that philanthropies limit pay in order to qualify for tax-deductible status. The president of the United States earns $400,000 a year. (This doesn’t count the special deals for his businesses that Donald Trump gets from those seeking favors.) Many highly talented people compete vigorously for this job. Charitable foundations should be able to find qualified people for the same pay. If not, then they are probably not the sort of organization that deserves the public’s support.
Limiting pay for the top executives at institutions receiving taxpayer subsidies, which would include presidents of universities and non-profit hospitals, should help put downward pressure for pay at the top more generally, leaving more money for everyone else.
David Callahan had an interesting NYT column on the philanthropical efforts of the latest cohort of the newly rich. The piece makes the important point that people like Bill Gates, the Walton family, and Mark Zuckerberg often use their givings to push their specific political agenda. As Callahan points out, these contributions involve a large amount of taxpayer dollars, these very rich people are getting their taxes reduced by roughly 40 cents for every dollar they give. This means, in effect, that Gates, the Waltons, Zuckerberg and the rest are effectively getting taxpayers to put up a large amount of money to support their political agenda in important areas of public policy.
There are a couple of additional points worth adding on this issue. First, these charitable efforts likely have advanced these billionaires in their efforts to get ever richer. This is especially likely to be the case with Bill Gates where efforts to establish himself as a great humanitarian likely discouraged efforts to take more actions against his company’s near monopoly in the computer operating system market. (Also, a program officer in the Gates Foundation once once told me that they would not support any work questioning the usefulness of patent support for drug research because of Gates’ dependence on intellectual property protections.)
The other point is that the foundations themselves help to contribute to inequality with the outsized paychecks given to their top executives. It is common for these people to get salaries at or above $1 million a year. (This is discussed in chapter 6 of Riggged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer [it’s free.])
It would be possible to require that philanthropies limit pay in order to qualify for tax-deductible status. The president of the United States earns $400,000 a year. (This doesn’t count the special deals for his businesses that Donald Trump gets from those seeking favors.) Many highly talented people compete vigorously for this job. Charitable foundations should be able to find qualified people for the same pay. If not, then they are probably not the sort of organization that deserves the public’s support.
Limiting pay for the top executives at institutions receiving taxpayer subsidies, which would include presidents of universities and non-profit hospitals, should help put downward pressure for pay at the top more generally, leaving more money for everyone else.
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Donald Trump’s economic team has been widely ridiculed for its projection that economic growth will average 3.0 percent annually over the next decade. However, a Washington Post article implies that Trump’s team may actually have been overly pessimistic. The article discusses the possibility that robots will be used to replace cashiers at Whole Foods, now that it has been purchased by Amazon.
The piece also raises the concern that automation will displace large numbers of workers throughout the economy over the next two decades.
“A 2013 study from Oxford University predicted that 47 percent of jobs in the United States could be performed by machines over the next two decades, and cashier roles carry an especially heightened risk.“
This pace of automation (losing 47 percent of jobs over two decades) is consistent with a 3.0 percent rate of productivity growth, roughly the same rate as the U.S. experienced in the long Golden Age from 1947 to 1973 and again from 1995 to 2005. By contrast, the Congressional Budget Office is projecting productivity growth of roughly 1.5 percent. If the Oxford study’s more optimistic assessment proves correct, with labor force growth in the range of 0.5 to 0.7 percent annually, GDP growth would be in the range of 3.5 to 3.7 percent. This far exceeds the Trump administration’s 3.0 percent projection.
Contrary to what is implied in this article, rapid productivity growth should lead to rapid wage growth and low unemployment, as was the case through most of the prior two periods. Of course, this assumes competent management of economic policy and there is a serious problem with being able to find qualified economists, which is why the people in charge of policy completely missed the housing bubble.
Donald Trump’s economic team has been widely ridiculed for its projection that economic growth will average 3.0 percent annually over the next decade. However, a Washington Post article implies that Trump’s team may actually have been overly pessimistic. The article discusses the possibility that robots will be used to replace cashiers at Whole Foods, now that it has been purchased by Amazon.
The piece also raises the concern that automation will displace large numbers of workers throughout the economy over the next two decades.
“A 2013 study from Oxford University predicted that 47 percent of jobs in the United States could be performed by machines over the next two decades, and cashier roles carry an especially heightened risk.“
This pace of automation (losing 47 percent of jobs over two decades) is consistent with a 3.0 percent rate of productivity growth, roughly the same rate as the U.S. experienced in the long Golden Age from 1947 to 1973 and again from 1995 to 2005. By contrast, the Congressional Budget Office is projecting productivity growth of roughly 1.5 percent. If the Oxford study’s more optimistic assessment proves correct, with labor force growth in the range of 0.5 to 0.7 percent annually, GDP growth would be in the range of 3.5 to 3.7 percent. This far exceeds the Trump administration’s 3.0 percent projection.
Contrary to what is implied in this article, rapid productivity growth should lead to rapid wage growth and low unemployment, as was the case through most of the prior two periods. Of course, this assumes competent management of economic policy and there is a serious problem with being able to find qualified economists, which is why the people in charge of policy completely missed the housing bubble.
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Apparently the dislike at the NYT is so intense that they couldn’t restrict it to the opinion pages. In an article on French President Emmanuel Macron’s plans for changing France’s labor market regulations, it referred to the current labor law as the, “rigid and job-killing labor code.”
It is not at all clear that France’s labor protections have a major impact on unemployment in the country. A cross-country analysis found no effect of employment regulations on unemployment. The more obvious cause of high French unemployment is the lack of demand in the economy which results from both Germany’s large trade surplus and its insistence on imposing austerity on France and other euro zone countries. The piece forgot to mention this major aspect of economic policy.
Apparently the dislike at the NYT is so intense that they couldn’t restrict it to the opinion pages. In an article on French President Emmanuel Macron’s plans for changing France’s labor market regulations, it referred to the current labor law as the, “rigid and job-killing labor code.”
It is not at all clear that France’s labor protections have a major impact on unemployment in the country. A cross-country analysis found no effect of employment regulations on unemployment. The more obvious cause of high French unemployment is the lack of demand in the economy which results from both Germany’s large trade surplus and its insistence on imposing austerity on France and other euro zone countries. The piece forgot to mention this major aspect of economic policy.
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Donald Trump went to Wisconsin today to tout the virtues of apprenticeship programs, which he claimed would give workers the skills they need to fill available jobs. Fortunately, the NYT had a good piece by Noam Scheiber that pointed out there is little evidence to support the view that the economy is suffering from a serious skills shortage.
The skills shortage is a recurring theme which businesses and pundit types routinely use to blame unemployment on workers rather than a lack of jobs in the economy. For example, here’s a McClatchy News Service piece from August 2014 telling readers that the problem was a lack of worker skills and also the employer sanctions in Obamacare which discouraged businesses from hiring full-time workers. The economy has since added almost 7 million jobs and involuntary part-time employment has plummeted. (Voluntary part-time employment has risen by roughly two million, as Obamacare made it possible for workers to get health care insurance outside of employment.)
Oh, and here’s NYT columnist Thomas Friedman in April of 2013. He spoke to the president of a technical college in North Carolina who Friedman quotes:
“‘We have a labor surplus in this country and a labor shortage at the same time,’ Green explained to me. Workers in North Carolina, particularly in textiles and furniture, who lost jobs either to outsourcing or the recession in 2008, often ‘do not have the skills required to get a new job today’ in the biotech, health care and manufacturing centers that are opening in the state.
“If before, he added, ‘you just needed a high school shop class or a short postsecondary certificate to work in a factory, now you need an associate degree in machining,’ a two-year program that requires higher math, I.T. and systems skills. In addition, some employers are now demanding that you not only have an associate degree but that nationally recognized skill certifications be incorporated into the curriculum to show that you have mastered the skills they want, like computer-integrated machining.”
And here’s J.P. Morgan CEO Jamie Dimon in January of 2014 explaining in a Washington Post interview that employers can’t find workers with the skills they need. How about another dose on the skills mismatch from Thomas Friedman, this time from May of 2012, when the unemployment rate was still over 6.0 percent.
“The Labor Department reported two weeks ago that even with our high national unemployment rate, employers advertised 3.74 million job openings in March. That is, in part, about a skills mismatch.”
And then we have a NYT article from July of 2010, near the bottom of the Great Recession, the headline of which told readers, “…factory jobs return, but employers find skills shortage.”
So there you have it, the evergreen story. There is a substantial segment of elite types who are always happy to hear about the skills shortage as an explanation for unemployment. See, the problem is not the state of the economy and its poor management by economists, the problem is always the ill-trained workers. You don’t need evidence for this one, just assert that the problem is workers don’t have the right skills and furrow your brow in a concerned manner. Works every time.
Donald Trump went to Wisconsin today to tout the virtues of apprenticeship programs, which he claimed would give workers the skills they need to fill available jobs. Fortunately, the NYT had a good piece by Noam Scheiber that pointed out there is little evidence to support the view that the economy is suffering from a serious skills shortage.
The skills shortage is a recurring theme which businesses and pundit types routinely use to blame unemployment on workers rather than a lack of jobs in the economy. For example, here’s a McClatchy News Service piece from August 2014 telling readers that the problem was a lack of worker skills and also the employer sanctions in Obamacare which discouraged businesses from hiring full-time workers. The economy has since added almost 7 million jobs and involuntary part-time employment has plummeted. (Voluntary part-time employment has risen by roughly two million, as Obamacare made it possible for workers to get health care insurance outside of employment.)
Oh, and here’s NYT columnist Thomas Friedman in April of 2013. He spoke to the president of a technical college in North Carolina who Friedman quotes:
“‘We have a labor surplus in this country and a labor shortage at the same time,’ Green explained to me. Workers in North Carolina, particularly in textiles and furniture, who lost jobs either to outsourcing or the recession in 2008, often ‘do not have the skills required to get a new job today’ in the biotech, health care and manufacturing centers that are opening in the state.
“If before, he added, ‘you just needed a high school shop class or a short postsecondary certificate to work in a factory, now you need an associate degree in machining,’ a two-year program that requires higher math, I.T. and systems skills. In addition, some employers are now demanding that you not only have an associate degree but that nationally recognized skill certifications be incorporated into the curriculum to show that you have mastered the skills they want, like computer-integrated machining.”
And here’s J.P. Morgan CEO Jamie Dimon in January of 2014 explaining in a Washington Post interview that employers can’t find workers with the skills they need. How about another dose on the skills mismatch from Thomas Friedman, this time from May of 2012, when the unemployment rate was still over 6.0 percent.
“The Labor Department reported two weeks ago that even with our high national unemployment rate, employers advertised 3.74 million job openings in March. That is, in part, about a skills mismatch.”
And then we have a NYT article from July of 2010, near the bottom of the Great Recession, the headline of which told readers, “…factory jobs return, but employers find skills shortage.”
So there you have it, the evergreen story. There is a substantial segment of elite types who are always happy to hear about the skills shortage as an explanation for unemployment. See, the problem is not the state of the economy and its poor management by economists, the problem is always the ill-trained workers. You don’t need evidence for this one, just assert that the problem is workers don’t have the right skills and furrow your brow in a concerned manner. Works every time.
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Apparently, at least no one at the New York Times cares about the budget deficit. An article that reported on the Fed’s plans to reduce its holdings of assets never once mentioned the implication for the budget deficit. Currently the Fed is refunding close to $100 billion a year to the Treasury based on the earnings from these assets. If its holdings were to drop to pre-crisis levels, measured as a share of GDP, this amount would fall to around $30–$40 billion. The difference could be close to $600 billion in revenue over the course of a decade (enough to fund the rich people’s tax cut under the Republican health care plan), but apparently the NYT didn’t think it was worth mentioning.
Apparently, at least no one at the New York Times cares about the budget deficit. An article that reported on the Fed’s plans to reduce its holdings of assets never once mentioned the implication for the budget deficit. Currently the Fed is refunding close to $100 billion a year to the Treasury based on the earnings from these assets. If its holdings were to drop to pre-crisis levels, measured as a share of GDP, this amount would fall to around $30–$40 billion. The difference could be close to $600 billion in revenue over the course of a decade (enough to fund the rich people’s tax cut under the Republican health care plan), but apparently the NYT didn’t think it was worth mentioning.
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That would seem to be the implication of the part of his discussion of the loss of “social capital” that deals with the increase in the percentage of women in the labor force. He tells readers:
“Work: The main trend was the gradual entrance of millions of women into the job market. In 2015, 74 percent of prime-working-age women (25 to 54) were in the labor force, up from 35 percent in 1948. However, there were social costs. There was more ‘reliance on markets for child care,’ and ‘community-based’ volunteer work suffered. Meanwhile, increasing numbers of men with lower levels of education dropped out of the labor force.”
It is not clear what exactly Samuelson means here, but presumably he is mentioning the decline in the labor force participation rate of less-educated men as one of the “social costs” of women entering the labor market. If so, the linkage is more than a bit bizarre. Countries like Sweden, Denmark, and Japan all had large increases in women’s labor force participation rates without any large decline in participation rates for men.
There are certainly economic and social factors that have reduced employment opportunities for less-educated men (mass incarceration is a big one), but it is a stretch to blame this on women entering the labor force.
That would seem to be the implication of the part of his discussion of the loss of “social capital” that deals with the increase in the percentage of women in the labor force. He tells readers:
“Work: The main trend was the gradual entrance of millions of women into the job market. In 2015, 74 percent of prime-working-age women (25 to 54) were in the labor force, up from 35 percent in 1948. However, there were social costs. There was more ‘reliance on markets for child care,’ and ‘community-based’ volunteer work suffered. Meanwhile, increasing numbers of men with lower levels of education dropped out of the labor force.”
It is not clear what exactly Samuelson means here, but presumably he is mentioning the decline in the labor force participation rate of less-educated men as one of the “social costs” of women entering the labor market. If so, the linkage is more than a bit bizarre. Countries like Sweden, Denmark, and Japan all had large increases in women’s labor force participation rates without any large decline in participation rates for men.
There are certainly economic and social factors that have reduced employment opportunities for less-educated men (mass incarceration is a big one), but it is a stretch to blame this on women entering the labor force.
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It’s a bit painful to see this piece in the NYT this morning, which tells readers that the Affordable Care Act gave workers the flexibility to leave jobs they didn’t like and to retire early. The latter option is especially important for people in bad health, who desperately need insurance, but often could not get it outside of employment before the ACA.
The reason it is painful to see this piece is because this benefit of the ACA is pretty damn obvious. There is an extensive literature dating back a quarter century about “job lock,” the idea that workers will be stuck in jobs they would otherwise leave, but can’t because they need the health insurance it provides. In addition to extending insurance coverage to people who did not already have it, the ACA largely ended job lock by allowing people to get relatively affordable policies through either Medicaid or the exchanges.
This flexibility is a huge deal in the U.S. labor market. More than five million people lose or leave their job every single month. It matters hugely that these people don’t have to worry about losing health care insurance for themselves and their families.
The ACA clearly gave workers this security. This can be easily shown in the surge in voluntary part-time employment that followed the creation of the exchanges and expansion of Medicaid in 2014. CEPR has been virtually alone in trying to call attention to this fact (e.g. here, here, here, and here). In particular, we pointed out that there were large increases in voluntary part-time among young parents (mostly mothers) and older workers, as highlighted in this NYT piece.
For some reason, the Obama administration and Democrats in Congress had no interest in highlighting this benefit of the ACA. I don’t know the reason for their not wanting to take credit for one of the main benefits of the program, but I do have a guess. Many of the parents choosing to work part-time were African American or Hispanic. (The older workers were more likely to be white.) The Democrats may not have wanted to have the ACA thought of as a policy that allowed non-white people to work less than they would have otherwise.
I have no idea if this actually explains the Democrats’ behavior (I’m open to other explanations), but it is the best one I can think of. Anyhow, the flexibility the ACA gives to workers is a huge huge deal. It is amazing that the Democrats never chose to highlight this benefit of the program.
It’s a bit painful to see this piece in the NYT this morning, which tells readers that the Affordable Care Act gave workers the flexibility to leave jobs they didn’t like and to retire early. The latter option is especially important for people in bad health, who desperately need insurance, but often could not get it outside of employment before the ACA.
The reason it is painful to see this piece is because this benefit of the ACA is pretty damn obvious. There is an extensive literature dating back a quarter century about “job lock,” the idea that workers will be stuck in jobs they would otherwise leave, but can’t because they need the health insurance it provides. In addition to extending insurance coverage to people who did not already have it, the ACA largely ended job lock by allowing people to get relatively affordable policies through either Medicaid or the exchanges.
This flexibility is a huge deal in the U.S. labor market. More than five million people lose or leave their job every single month. It matters hugely that these people don’t have to worry about losing health care insurance for themselves and their families.
The ACA clearly gave workers this security. This can be easily shown in the surge in voluntary part-time employment that followed the creation of the exchanges and expansion of Medicaid in 2014. CEPR has been virtually alone in trying to call attention to this fact (e.g. here, here, here, and here). In particular, we pointed out that there were large increases in voluntary part-time among young parents (mostly mothers) and older workers, as highlighted in this NYT piece.
For some reason, the Obama administration and Democrats in Congress had no interest in highlighting this benefit of the ACA. I don’t know the reason for their not wanting to take credit for one of the main benefits of the program, but I do have a guess. Many of the parents choosing to work part-time were African American or Hispanic. (The older workers were more likely to be white.) The Democrats may not have wanted to have the ACA thought of as a policy that allowed non-white people to work less than they would have otherwise.
I have no idea if this actually explains the Democrats’ behavior (I’m open to other explanations), but it is the best one I can think of. Anyhow, the flexibility the ACA gives to workers is a huge huge deal. It is amazing that the Democrats never chose to highlight this benefit of the program.
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The NYT had an interesting article on how the pharmaceutical company Alkermes had successfully promoted its drug Vivitrol as a treatment for opioid addiction, even though there is little evidence the drug is more effective than older and cheaper alternatives. This effort has involved a massive marketing campaign that has included campaign contributions to politicians in a position to influence the choice of drugs, as well as the lobbying of judges in a position to determine the course of a treatment program.
The piece neglected to mention the fact that Alkermes would have little incentive to engage in such practices if it did not have a government-granted patent monopoly on Vivitrol. If the drug were selling at generic prices, it would not pay for expensive, and possibly corrupt, lobbying efforts.
The NYT had an interesting article on how the pharmaceutical company Alkermes had successfully promoted its drug Vivitrol as a treatment for opioid addiction, even though there is little evidence the drug is more effective than older and cheaper alternatives. This effort has involved a massive marketing campaign that has included campaign contributions to politicians in a position to influence the choice of drugs, as well as the lobbying of judges in a position to determine the course of a treatment program.
The piece neglected to mention the fact that Alkermes would have little incentive to engage in such practices if it did not have a government-granted patent monopoly on Vivitrol. If the drug were selling at generic prices, it would not pay for expensive, and possibly corrupt, lobbying efforts.
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That would have been a useful point to mention in a Washington Post article that reports on an orphan drug with a list price of $750,000 for a year’s treatment. The piece reports that the drug’s manufacturer, Biogen, offers the drug at concessionary prices to people who sign away privacy rights.
The piece notes the price being charged, then tells readers:
“But the Laskos [the family profiled in the piece] know it is expensive and risky for a company to develop a drug for a disease that affects one in 10,000 babies born each year. Drugs for tiny patient populations — called “orphan diseases” — are an increasingly attractive niche of drug development in part because of the high prices companies can charge.”
While the drug companies do charge very high prices for many of these drugs, they also find it attractive to develop drugs for orphan diseases because of the orphan drug tax credit. This credit covers 50 percent of the cost of clinical drug tests. (The number could actually be somewhat higher than 50 percent, since an employee’s salary can be fully charged as a covered expense if they devote 80 percent of their time to tests of orphan drugs. This means that for an employee right at this floor, the government is paying 62.5 percent of their pay, assuming the company accounts time honestly.)
Anyhow, it would have been worth noting this tax credit, since the federal government is sharing in this “expensive and risky” effort. This also suggests an obvious way around the problem of high-priced drugs. If the federal government paid the full cost (instead of half) of the research upfront, then the drug could be produced and sold as a generic.
In that case, we would likely be talking about a drug that would sell for around $750 a year, rather than $750,000, since few drugs are actually expensive to manufacture. It is probably worth mentioning in this context that the Washington Post receives considerable advertising revenue from pharmaceutical companies.
That would have been a useful point to mention in a Washington Post article that reports on an orphan drug with a list price of $750,000 for a year’s treatment. The piece reports that the drug’s manufacturer, Biogen, offers the drug at concessionary prices to people who sign away privacy rights.
The piece notes the price being charged, then tells readers:
“But the Laskos [the family profiled in the piece] know it is expensive and risky for a company to develop a drug for a disease that affects one in 10,000 babies born each year. Drugs for tiny patient populations — called “orphan diseases” — are an increasingly attractive niche of drug development in part because of the high prices companies can charge.”
While the drug companies do charge very high prices for many of these drugs, they also find it attractive to develop drugs for orphan diseases because of the orphan drug tax credit. This credit covers 50 percent of the cost of clinical drug tests. (The number could actually be somewhat higher than 50 percent, since an employee’s salary can be fully charged as a covered expense if they devote 80 percent of their time to tests of orphan drugs. This means that for an employee right at this floor, the government is paying 62.5 percent of their pay, assuming the company accounts time honestly.)
Anyhow, it would have been worth noting this tax credit, since the federal government is sharing in this “expensive and risky” effort. This also suggests an obvious way around the problem of high-priced drugs. If the federal government paid the full cost (instead of half) of the research upfront, then the drug could be produced and sold as a generic.
In that case, we would likely be talking about a drug that would sell for around $750 a year, rather than $750,000, since few drugs are actually expensive to manufacture. It is probably worth mentioning in this context that the Washington Post receives considerable advertising revenue from pharmaceutical companies.
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