I’ve had people ask me, so I went back to refresh my memory. Yes, it was very bad news as the Watergate scandal unfolded and Nixon was eventually forced to resign. The economy slipped into a recession beginning in November of 1973, with the unemployment rate rising from a low of 4.6 percent in October of 1973 to an eventual peak of 9.0 percent in May of 1975.
Source: Bureau of Labor Statistics.
Having put these numbers on the table, I’m not sure how much of this can be attributed to Watergate and the crisis of the Nixon presidency. The proximate cause was the Arab oil embargo which quadrupled the price of oil at a time when the U.S. was far more dependent on oil than is currently the case. Nixon also removed the wage and controls which were intended to keep inflation under control through the 1972 election. Throw in a wheat deal with the Soviet Union that sent wheat prices soaring and you have a serious inflation problem.
The Fed responded by slamming on the brakes which gave us at the time what was considered to be a pretty awful recession. Would Nixon have done anything to save the economy if he wasn’t struggling to save his presidency? It’s hard to say to say what he could or would have done, but the story as it played out was not pretty.
I’ve had people ask me, so I went back to refresh my memory. Yes, it was very bad news as the Watergate scandal unfolded and Nixon was eventually forced to resign. The economy slipped into a recession beginning in November of 1973, with the unemployment rate rising from a low of 4.6 percent in October of 1973 to an eventual peak of 9.0 percent in May of 1975.
Source: Bureau of Labor Statistics.
Having put these numbers on the table, I’m not sure how much of this can be attributed to Watergate and the crisis of the Nixon presidency. The proximate cause was the Arab oil embargo which quadrupled the price of oil at a time when the U.S. was far more dependent on oil than is currently the case. Nixon also removed the wage and controls which were intended to keep inflation under control through the 1972 election. Throw in a wheat deal with the Soviet Union that sent wheat prices soaring and you have a serious inflation problem.
The Fed responded by slamming on the brakes which gave us at the time what was considered to be a pretty awful recession. Would Nixon have done anything to save the economy if he wasn’t struggling to save his presidency? It’s hard to say to say what he could or would have done, but the story as it played out was not pretty.
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We hear endless stories in the media about how the robots are taking all the jobs. There was a new rush of such stories after the release of a study by Daron Acemoglu and Pascual Restrepo, which found that robots were responsible for a substantial share of the job loss in manufacturing in the last decade. (For example, this Bloomberg piece by Mira Rojanasakul and Peter Coy.)
However, there remains a very basic problem in the robot story, it is not showing up in the productivity data. To step back a minute, robots are supposed to replace human labor. This means that for the same number of hours of human work, we should see much higher output of goods and services, since the robots are now adding to total output. This is what productivity growth means.
So if robots are having a large impact on jobs, then we should see productivity growth going through the roof. Instead, it is falling through the floor. It has averaged less than 1.0 percent annually in the last decade. This compares to an average growth rate of 3.0 percent in the decade from 1995 to 2005 and also in the long Golden Age from 1947 to 1973.
Strikingly, productivity growth has been especially bad in manufacturing, the place where we see the greatest use of robots. Here’s the picture since 1988, the period for which the Bureau of Labor Statistics (BLS) has a consistent series.
Source: Bureau of Labor Statistics.
Over the last four years productivity growth in manufacturing averaged less than 0.2 percent annually. This compares to rates that often exceeded 4.0 percent in prior decades. This slowdown is especially striking since the rate of installation has increased sharply in recent years. According to data cited in the Bloomberg piece, we’ve added an average of 22,000 robots a year in the last three years. This compares to a peak of around 16,000 in the years before the Great Recession.
If robots are leading to massive job loss, then we should be seeing some serious gains in productivity. Instead the opposite has occurred. It’s awful to let a good story be ruined by evidence, but it just doesn’t seem that the use of robots will go far towards explaining the weakness of wage and job growth in the recovery.
We hear endless stories in the media about how the robots are taking all the jobs. There was a new rush of such stories after the release of a study by Daron Acemoglu and Pascual Restrepo, which found that robots were responsible for a substantial share of the job loss in manufacturing in the last decade. (For example, this Bloomberg piece by Mira Rojanasakul and Peter Coy.)
However, there remains a very basic problem in the robot story, it is not showing up in the productivity data. To step back a minute, robots are supposed to replace human labor. This means that for the same number of hours of human work, we should see much higher output of goods and services, since the robots are now adding to total output. This is what productivity growth means.
So if robots are having a large impact on jobs, then we should see productivity growth going through the roof. Instead, it is falling through the floor. It has averaged less than 1.0 percent annually in the last decade. This compares to an average growth rate of 3.0 percent in the decade from 1995 to 2005 and also in the long Golden Age from 1947 to 1973.
Strikingly, productivity growth has been especially bad in manufacturing, the place where we see the greatest use of robots. Here’s the picture since 1988, the period for which the Bureau of Labor Statistics (BLS) has a consistent series.
Source: Bureau of Labor Statistics.
Over the last four years productivity growth in manufacturing averaged less than 0.2 percent annually. This compares to rates that often exceeded 4.0 percent in prior decades. This slowdown is especially striking since the rate of installation has increased sharply in recent years. According to data cited in the Bloomberg piece, we’ve added an average of 22,000 robots a year in the last three years. This compares to a peak of around 16,000 in the years before the Great Recession.
If robots are leading to massive job loss, then we should be seeing some serious gains in productivity. Instead the opposite has occurred. It’s awful to let a good story be ruined by evidence, but it just doesn’t seem that the use of robots will go far towards explaining the weakness of wage and job growth in the recovery.
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The Washington Post has long pushed the view that a dollar (or euro) that is in the pocket of a middle-class person is a dollar that should be in the pockets of the rich. (They are okay with crumbs for the poor.) In keeping with this position, in its lead editorial today the Post complained about the “sclerotic statism” of the French economy. It then called for increasing employment, “through reforms of the labor code, not by protectionism or restriction of immigration.”
It is worth bringing a little bit of data to the fact free zone of the Washington Post opinion pages. France actually has consistently had a higher employment rate for its prime-age workers (ages 25 to 54) than the United States.
As can be seen, the employment rate for prime-age workers in France was roughly 2 percentage points higher in 2003. The gap expanded to almost 7 percentage points following the downturn, but it has in more recent years narrowed again to just under 2 percentage points.
France does have much lower employment rates among younger and older workers than the United States, but this is due to policy choices. College is largely free in France and students get stipends from the government. Therefore, many fewer young people work. France also makes it much easier for people to retire in their early sixties than in the United States, with largely free health care and earlier pensions. The merits of these policies can be debated, but they are not evidence of a sclerotic economy.
It is also not clear that the Washington Post’s desire to weaken protections for workers (euphemistically described as “reforms of the labor code”) will have a significant effect in reducing unemployment or raising employment. Extensive research has shown there is little relationship between worker protections and employment. It is also worth noting that the Post denounced protectionism in this editorial, but it is fine with protectionism in the form of ever longer and stronger copyright and patent protection, which benefit people it likes.
The most obvious reason that France’s employment rates have not returned to pre-recession levels is the austerity demanded by Germany, which it is able to impose on France through its control of the euro. There is little reason to believe that if France were able to spend another 1–2 percent of its GDP on infrastructure, training, and other forms of public investment, its economy and employment would not expand.
The Post is of course a big fan of austerity. Rather than acknowledging that a lack of demand is the main factor keeping workers from being employed, it would rather blame the workers for lacking the right skills.
The Washington Post has long pushed the view that a dollar (or euro) that is in the pocket of a middle-class person is a dollar that should be in the pockets of the rich. (They are okay with crumbs for the poor.) In keeping with this position, in its lead editorial today the Post complained about the “sclerotic statism” of the French economy. It then called for increasing employment, “through reforms of the labor code, not by protectionism or restriction of immigration.”
It is worth bringing a little bit of data to the fact free zone of the Washington Post opinion pages. France actually has consistently had a higher employment rate for its prime-age workers (ages 25 to 54) than the United States.
As can be seen, the employment rate for prime-age workers in France was roughly 2 percentage points higher in 2003. The gap expanded to almost 7 percentage points following the downturn, but it has in more recent years narrowed again to just under 2 percentage points.
France does have much lower employment rates among younger and older workers than the United States, but this is due to policy choices. College is largely free in France and students get stipends from the government. Therefore, many fewer young people work. France also makes it much easier for people to retire in their early sixties than in the United States, with largely free health care and earlier pensions. The merits of these policies can be debated, but they are not evidence of a sclerotic economy.
It is also not clear that the Washington Post’s desire to weaken protections for workers (euphemistically described as “reforms of the labor code”) will have a significant effect in reducing unemployment or raising employment. Extensive research has shown there is little relationship between worker protections and employment. It is also worth noting that the Post denounced protectionism in this editorial, but it is fine with protectionism in the form of ever longer and stronger copyright and patent protection, which benefit people it likes.
The most obvious reason that France’s employment rates have not returned to pre-recession levels is the austerity demanded by Germany, which it is able to impose on France through its control of the euro. There is little reason to believe that if France were able to spend another 1–2 percent of its GDP on infrastructure, training, and other forms of public investment, its economy and employment would not expand.
The Post is of course a big fan of austerity. Rather than acknowledging that a lack of demand is the main factor keeping workers from being employed, it would rather blame the workers for lacking the right skills.
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Actually, the article told people that he wanted to spend 50 billion euros. Is that big for the French economy? Would it matter if it were over one year or ten years?
Apparently, the NYT doesn’t think so, since the article never tells people how long a period is covered by the proposal. For those who might care about such trivia, the proposal is for a five-year period, putting it at roughly 10 billion euros a year. Since France’s GDP is projected to average roughly 2.5 trillion euros annually over this period, the proposal would cost approximately 0.4 percent of GDP.
Is this really that hard?
Is there some reason that a reporter covering the French presidential elections can’t tell us the number of years involved in a spending program? It does make a difference.
How about some information, like the share of GDP, that would put the measure in a context that would be meaningful to NYT readers. I know the paper has a well-educated readership, but I am willing to bet that fewer than one in ten could tell you France’s GDP within a 25 percent margin of error.
None of this should be controversial. When she was the NYT’s Public Editor, Margaret Sullivan wrote a very nice column on exactly this point. She got then Washington editor David Leonhardt to strongly agree with her.
What’s the problem here? The newspaper is supposed to be providing its readers with information. Providing a large number without any context is not providing information.
Actually, the article told people that he wanted to spend 50 billion euros. Is that big for the French economy? Would it matter if it were over one year or ten years?
Apparently, the NYT doesn’t think so, since the article never tells people how long a period is covered by the proposal. For those who might care about such trivia, the proposal is for a five-year period, putting it at roughly 10 billion euros a year. Since France’s GDP is projected to average roughly 2.5 trillion euros annually over this period, the proposal would cost approximately 0.4 percent of GDP.
Is this really that hard?
Is there some reason that a reporter covering the French presidential elections can’t tell us the number of years involved in a spending program? It does make a difference.
How about some information, like the share of GDP, that would put the measure in a context that would be meaningful to NYT readers. I know the paper has a well-educated readership, but I am willing to bet that fewer than one in ten could tell you France’s GDP within a 25 percent margin of error.
None of this should be controversial. When she was the NYT’s Public Editor, Margaret Sullivan wrote a very nice column on exactly this point. She got then Washington editor David Leonhardt to strongly agree with her.
What’s the problem here? The newspaper is supposed to be providing its readers with information. Providing a large number without any context is not providing information.
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Susan Dynarksi had a very good piece in the NYT Upshot section on several measures from the Trump administration which will allow the financial industry to collect larger fees from student loans. However, the piece errs in describing the changes as being “deregulation.” Rather these changes are ways in which the government is deliberately choosing not to enforce contracts in ways that increase corporate profits at the expense of student borrowers.
Suppose that the government announced that it was going to stop making efforts to verify income among people applying for food stamps. In fact, suppose it decided to no longer even verify the number of children an applicant was claiming. Would anyone consider this move “deregulation?”
This is comparable to what the government is doing in reference to the firms involved in the student loan repayment process. The purpose of the loans is make it easier for kids from low- and middle-income families to attend college. The government is supposed to design contracts that fill this purpose at the lowest cost to both the government and the students.
The measures being taken by the Trump administration are not likely to lower costs for the government and are almost certainly going to raise them for students. In effect, it is making the contracts more advantageous to the financial industry by subjecting students to higher fees.
Calling this “deregulation” might lead readers to believe there is some principle at stake here. There isn’t. As with most of the actions of the Trump administration, the only principle is giving more money to the rich and powerful.
Susan Dynarksi had a very good piece in the NYT Upshot section on several measures from the Trump administration which will allow the financial industry to collect larger fees from student loans. However, the piece errs in describing the changes as being “deregulation.” Rather these changes are ways in which the government is deliberately choosing not to enforce contracts in ways that increase corporate profits at the expense of student borrowers.
Suppose that the government announced that it was going to stop making efforts to verify income among people applying for food stamps. In fact, suppose it decided to no longer even verify the number of children an applicant was claiming. Would anyone consider this move “deregulation?”
This is comparable to what the government is doing in reference to the firms involved in the student loan repayment process. The purpose of the loans is make it easier for kids from low- and middle-income families to attend college. The government is supposed to design contracts that fill this purpose at the lowest cost to both the government and the students.
The measures being taken by the Trump administration are not likely to lower costs for the government and are almost certainly going to raise them for students. In effect, it is making the contracts more advantageous to the financial industry by subjecting students to higher fees.
Calling this “deregulation” might lead readers to believe there is some principle at stake here. There isn’t. As with most of the actions of the Trump administration, the only principle is giving more money to the rich and powerful.
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The Washington Post featured a short explainer on trade deficits by Martin Feldstein, a Harvard Professor and head of the Council of Economic Advisers under President Reagan, and George Schultz, a former Secretary of Labor, Treasury, and State.
The piece told readers that we have trade deficits because the United States as a country consumes more than it produces. It added that the only way to reduce the trade deficit is by increasing domestic savings, for example by reducing the federal budget deficit.
As every economist knows, we can also increase savings by increasing output, unless the economy is already producing at its potential level of output. This means that if we reduced the trade deficit, for example, by lowering the value of the dollar, which makes U.S.-produced goods and services more competitive internationally, we can increase output and thereby also increase savings. (Savings rise in step with income.)
While the identity between savings and trade deficit referenced by Feldstein and Schultz always holds, unless the economy is producing at its potential level of output, we can increase output and employment by reducing the trade deficit.
Simple, isn’t it? Now why would these distinguished economists try to mislead people?
The Washington Post featured a short explainer on trade deficits by Martin Feldstein, a Harvard Professor and head of the Council of Economic Advisers under President Reagan, and George Schultz, a former Secretary of Labor, Treasury, and State.
The piece told readers that we have trade deficits because the United States as a country consumes more than it produces. It added that the only way to reduce the trade deficit is by increasing domestic savings, for example by reducing the federal budget deficit.
As every economist knows, we can also increase savings by increasing output, unless the economy is already producing at its potential level of output. This means that if we reduced the trade deficit, for example, by lowering the value of the dollar, which makes U.S.-produced goods and services more competitive internationally, we can increase output and thereby also increase savings. (Savings rise in step with income.)
While the identity between savings and trade deficit referenced by Feldstein and Schultz always holds, unless the economy is producing at its potential level of output, we can increase output and employment by reducing the trade deficit.
Simple, isn’t it? Now why would these distinguished economists try to mislead people?
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The Washington Post has a major article on a speech by GE’s chief executive Jeffrey Immelt in which he condemned lackluster efforts to fund the Export-Import Bank as “pathetic.” The piece neglected to mention that GE is almost always one of the largest recipients of below market interest rate loans or guarantees from the Export-Import Bank.
The headline also reported Immelt’s condemnation of “protectionism.” It would have been worth pointing out that much of what GE sells in the United States is produced overseas, which means that GE’s profits would likely be hurt by some protectionist measures or even efforts to reduce the value of the dollar closer to its market rate.
It is also worth noting that it appears that Mr. Immelt is just fine with patent and copyright protection. These forms of protection are enormously costly, often raising the price of the protected items by several thousand percent above the free market price. For this reason, it is wrong to say that Immelt is opposed to protectionism, he appears to just be opposed to types of protectionism that reduce this company’s profit.
The Washington Post has a major article on a speech by GE’s chief executive Jeffrey Immelt in which he condemned lackluster efforts to fund the Export-Import Bank as “pathetic.” The piece neglected to mention that GE is almost always one of the largest recipients of below market interest rate loans or guarantees from the Export-Import Bank.
The headline also reported Immelt’s condemnation of “protectionism.” It would have been worth pointing out that much of what GE sells in the United States is produced overseas, which means that GE’s profits would likely be hurt by some protectionist measures or even efforts to reduce the value of the dollar closer to its market rate.
It is also worth noting that it appears that Mr. Immelt is just fine with patent and copyright protection. These forms of protection are enormously costly, often raising the price of the protected items by several thousand percent above the free market price. For this reason, it is wrong to say that Immelt is opposed to protectionism, he appears to just be opposed to types of protectionism that reduce this company’s profit.
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