In the era of Donald Trump, the New York Times apparently felt it was important to get a climate denier among its columnists. For this reason, they hired Bret Stephens away from the Wall Street Journal. Apparently, they could not find a climate denier who also understood arithmetic, since Mr. Stephens clearly falls short in this category.
Stephens uses his most recent column to tout mistakes made by those pushing for reductions in greenhouse gas emissions. He rightly seizes on biofuels, which are in fact a net loser from a global warming perspective.
While he is right that the effort to promote biofuels was a major mistake, it’s not clear what the importance of this is. There were major mistakes in the development of every major technology in history. It would be hard to imagine that the effort to develop clean or cleaner energy sources would not take some wrong turns.
Anyhow, Stephens goes badly astray when he tries to tell readers that we have seen nothing but wrong turns. He tells us:
“There’s also been some acknowledgment that Germany’s Energiewende — the uber-ambitious “energy turn” embarked upon by Angela Merkel in 2010 — has been less than a model for others. The country is producing record levels of energy from wind and solar power, but emissions are almost exactly what they were in 2009. Meanwhile, German households pay nearly the highest electricity bills in Europe, all for what amounts to an illusion of ecological virtue.”
I managed to track down Mr. Arithmetic (he’s been on a long vacation) to ask about this one. Mr. Arithmetic points out that Germany’s economy has grown by more than 16 percent since 2009. This means if Stephens is right, that its emissions are lower today than they were in 2009, then Germany has managed a remarkable 16 percent reduction in emissions per unit of GDP in just eight years.
Contrary to what Stephens implies in his column, this would be an incredible success story, especially since Germany’s emissions per unit of GDP were already relatively low. (It is harder to achieve a larger percentage reduction from a low level than a high level.) If Stephens is right about Germany, then it should be easy for the United States to achieve and beat the emissions reductions set in the Paris agreement.
It is also worth noting that everyone understood that the first-movers were going to pay a higher price than followers. In other words, Germans understood that by taking the lead in reducing emissions it would pay a higher cost for reductions than laggards. They would be the cutting edge in developing and putting in place new technology, meaning that they would be stuck with paying the bill for some losers. The laggards would only pay for the winners.
This was a very socially minded position, where the whole world stood to gain from the fact that Germany was taking the lead in reducing greenhouse gas emissions. This wasn’t a case of stupidity, as Stephens seems to think. It was a case of caring about the future of humanity and being willing to make some sacrifice to protect it.
In the era of Donald Trump, the New York Times apparently felt it was important to get a climate denier among its columnists. For this reason, they hired Bret Stephens away from the Wall Street Journal. Apparently, they could not find a climate denier who also understood arithmetic, since Mr. Stephens clearly falls short in this category.
Stephens uses his most recent column to tout mistakes made by those pushing for reductions in greenhouse gas emissions. He rightly seizes on biofuels, which are in fact a net loser from a global warming perspective.
While he is right that the effort to promote biofuels was a major mistake, it’s not clear what the importance of this is. There were major mistakes in the development of every major technology in history. It would be hard to imagine that the effort to develop clean or cleaner energy sources would not take some wrong turns.
Anyhow, Stephens goes badly astray when he tries to tell readers that we have seen nothing but wrong turns. He tells us:
“There’s also been some acknowledgment that Germany’s Energiewende — the uber-ambitious “energy turn” embarked upon by Angela Merkel in 2010 — has been less than a model for others. The country is producing record levels of energy from wind and solar power, but emissions are almost exactly what they were in 2009. Meanwhile, German households pay nearly the highest electricity bills in Europe, all for what amounts to an illusion of ecological virtue.”
I managed to track down Mr. Arithmetic (he’s been on a long vacation) to ask about this one. Mr. Arithmetic points out that Germany’s economy has grown by more than 16 percent since 2009. This means if Stephens is right, that its emissions are lower today than they were in 2009, then Germany has managed a remarkable 16 percent reduction in emissions per unit of GDP in just eight years.
Contrary to what Stephens implies in his column, this would be an incredible success story, especially since Germany’s emissions per unit of GDP were already relatively low. (It is harder to achieve a larger percentage reduction from a low level than a high level.) If Stephens is right about Germany, then it should be easy for the United States to achieve and beat the emissions reductions set in the Paris agreement.
It is also worth noting that everyone understood that the first-movers were going to pay a higher price than followers. In other words, Germans understood that by taking the lead in reducing emissions it would pay a higher cost for reductions than laggards. They would be the cutting edge in developing and putting in place new technology, meaning that they would be stuck with paying the bill for some losers. The laggards would only pay for the winners.
This was a very socially minded position, where the whole world stood to gain from the fact that Germany was taking the lead in reducing greenhouse gas emissions. This wasn’t a case of stupidity, as Stephens seems to think. It was a case of caring about the future of humanity and being willing to make some sacrifice to protect it.
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Theresa Brown is far too generous to the U.S. health care system in her NYT column. She tells readers:
“Health care in the United States is more expensive because, unlike the systems in other countries, ours rests on the idea that profits and quality health care go hand in hand.”
It is far too generous to say that any idea is behind the structure of the U.S. health care system. When the drug companies push for longer and stronger patent protection or doctors are trying to restrict competition, they aren’t pursuing ideas, they are trying to increase their incomes. No one should pretend there is some general principle at stake here.
Theresa Brown is far too generous to the U.S. health care system in her NYT column. She tells readers:
“Health care in the United States is more expensive because, unlike the systems in other countries, ours rests on the idea that profits and quality health care go hand in hand.”
It is far too generous to say that any idea is behind the structure of the U.S. health care system. When the drug companies push for longer and stronger patent protection or doctors are trying to restrict competition, they aren’t pursuing ideas, they are trying to increase their incomes. No one should pretend there is some general principle at stake here.
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Charles Lane, who made his reputation by misrepresenting studies on Social Security Disability in the Washington Post, has apparently just discovered that states that vote Democratic also have higher state income taxes. While most folks knew this, Lane acts like Donald Trump passing around maps of the Electoral College vote to reporters; he thinks he has discovered something new.
He gleefully suggests that the Republican propose a tax reform that will end the deductibility of state income taxes and use the savings ($74 billion a year or 0.4 percent of GDP) for an enhanced Earned Income Tax Credit and a modest boost in infrastructure spending. Lane argues that this would pose a devastating problem for Democrats.
The point is that the current deduction means that the federal government effectively subsidizes 40 cents of every dollar that high-income people in blue states pay in state income taxes. This makes it easier for them to raise taxes to pay for things like high-quality Medicaid, pre-kindergarten, and child care. But Lane wants them to have to choose between an expanded EITC and modest boost in infrastructure and maintaining their spending in these areas. He thinks this is especially clever since it will look like they are protecting a tax break for the rich.
This is very cute, but let’s see if we get cuter. How about two other reforms that would whack the blue states while making most of the population better off? Suppose we tried to nail the high rollers in the financial sector with a modest financial transactions tax? Representative Peter DeFazio proposed just such a measure yesterday. This would radically downsize the industry, by eliminating a vast amount of wasteful trading.
This would be a huge hit to the financial industry, primarily located in New York and other blue states. It would also raise more than $40 billion a year (other versions would raise more). Virtually all of this money comes out of the hide of the financial industry itself, since the cost of the tax would be fully offset by a reduction in trading volume, leaving trading costs for most investors unchanged.
For another route, how about publicly financed research for prescription drugs? This would allow new drugs for treating cancer, AIDS, and other diseases to be sold in a free market for a few hundred dollars rather than tens or even hundreds of thousands of dollars charged when drug companies have patent monopolies. While the folks during the research could still count on good salaries, the huge dividends earned by patent holders and pharma execs, who are overwhelming blue staters, would disappear. The benefits in lower drug prices could reach $400 billion a year, or more than 2.0 percent of GDP.
What do you say Mr. Lane? Here are some ways to really whack blue states while helping the low- and middle-income people that Democrats are supposed to care about. Are you in?
Charles Lane, who made his reputation by misrepresenting studies on Social Security Disability in the Washington Post, has apparently just discovered that states that vote Democratic also have higher state income taxes. While most folks knew this, Lane acts like Donald Trump passing around maps of the Electoral College vote to reporters; he thinks he has discovered something new.
He gleefully suggests that the Republican propose a tax reform that will end the deductibility of state income taxes and use the savings ($74 billion a year or 0.4 percent of GDP) for an enhanced Earned Income Tax Credit and a modest boost in infrastructure spending. Lane argues that this would pose a devastating problem for Democrats.
The point is that the current deduction means that the federal government effectively subsidizes 40 cents of every dollar that high-income people in blue states pay in state income taxes. This makes it easier for them to raise taxes to pay for things like high-quality Medicaid, pre-kindergarten, and child care. But Lane wants them to have to choose between an expanded EITC and modest boost in infrastructure and maintaining their spending in these areas. He thinks this is especially clever since it will look like they are protecting a tax break for the rich.
This is very cute, but let’s see if we get cuter. How about two other reforms that would whack the blue states while making most of the population better off? Suppose we tried to nail the high rollers in the financial sector with a modest financial transactions tax? Representative Peter DeFazio proposed just such a measure yesterday. This would radically downsize the industry, by eliminating a vast amount of wasteful trading.
This would be a huge hit to the financial industry, primarily located in New York and other blue states. It would also raise more than $40 billion a year (other versions would raise more). Virtually all of this money comes out of the hide of the financial industry itself, since the cost of the tax would be fully offset by a reduction in trading volume, leaving trading costs for most investors unchanged.
For another route, how about publicly financed research for prescription drugs? This would allow new drugs for treating cancer, AIDS, and other diseases to be sold in a free market for a few hundred dollars rather than tens or even hundreds of thousands of dollars charged when drug companies have patent monopolies. While the folks during the research could still count on good salaries, the huge dividends earned by patent holders and pharma execs, who are overwhelming blue staters, would disappear. The benefits in lower drug prices could reach $400 billion a year, or more than 2.0 percent of GDP.
What do you say Mr. Lane? Here are some ways to really whack blue states while helping the low- and middle-income people that Democrats are supposed to care about. Are you in?
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A Washington Post article on a bill passed by the House, which would allow employers to give workers time-and-a-half credit for overtime hours, instead of time-and-a-half pay, likely misled many readers on the substance of the bill. The very first sentence told readers the bill:
“…would allow private-sector employees to exchange overtime pay for ‘compensatory time’ off.”
This is not true. The bill does not give the employee the right to say they would prefer compensatory time for working overtime, it gives this right to the employer. In principle, the worker is supposed to have the option to refuse the offer and say that they would instead prefer their overtime pay. However, the piece further misleads readers in the second paragraph:
“It [the bill] seeks to take a similar provision that has been available to government workers since 1985 and extend it to private-sector employees, making it legal for them to choose between an hour and a half of paid comp time and time-and-a-half pay when they work additional hours.”
There is a big difference between public employees and private sector employees. Public sector employees cannot be fired at will, while private sector employees can be, unless they are covered by a union contract. While this legislation, in principle, protects private sector employees from being coerced into accepting time off in lieu of overtime pay, it is difficult to see how this could be enforced.
An employer can fire anyone for almost any reason at any time. While the bill does prohibit an employer from firing someone for refusing to take comp time, an employer can legally fire someone because their last name begins with the letter “B.” This means that a worker who refuses to accept comp time can be fired over the first letter in their last name.
This could be contested in court, where the worker would argue that the actual reason was their refusal to accept comp time. Perhaps they could prove this, but the damages, even when doubled as required in the bill, would almost certainly not cover the cost of hiring a lawyer. This means that almost no one would use the legal system to protect their rights. If an employer fired one worker over this issue, the rest would quickly get the message.
If the Republicans actually wanted to make the prohibition on firing an enforceable right, the bill would require the employer to pay legal fees, if they lost a case. This requirement for civil rights cases is what makes enforcement of the civil rights laws possible.
A Washington Post article on a bill passed by the House, which would allow employers to give workers time-and-a-half credit for overtime hours, instead of time-and-a-half pay, likely misled many readers on the substance of the bill. The very first sentence told readers the bill:
“…would allow private-sector employees to exchange overtime pay for ‘compensatory time’ off.”
This is not true. The bill does not give the employee the right to say they would prefer compensatory time for working overtime, it gives this right to the employer. In principle, the worker is supposed to have the option to refuse the offer and say that they would instead prefer their overtime pay. However, the piece further misleads readers in the second paragraph:
“It [the bill] seeks to take a similar provision that has been available to government workers since 1985 and extend it to private-sector employees, making it legal for them to choose between an hour and a half of paid comp time and time-and-a-half pay when they work additional hours.”
There is a big difference between public employees and private sector employees. Public sector employees cannot be fired at will, while private sector employees can be, unless they are covered by a union contract. While this legislation, in principle, protects private sector employees from being coerced into accepting time off in lieu of overtime pay, it is difficult to see how this could be enforced.
An employer can fire anyone for almost any reason at any time. While the bill does prohibit an employer from firing someone for refusing to take comp time, an employer can legally fire someone because their last name begins with the letter “B.” This means that a worker who refuses to accept comp time can be fired over the first letter in their last name.
This could be contested in court, where the worker would argue that the actual reason was their refusal to accept comp time. Perhaps they could prove this, but the damages, even when doubled as required in the bill, would almost certainly not cover the cost of hiring a lawyer. This means that almost no one would use the legal system to protect their rights. If an employer fired one worker over this issue, the rest would quickly get the message.
If the Republicans actually wanted to make the prohibition on firing an enforceable right, the bill would require the employer to pay legal fees, if they lost a case. This requirement for civil rights cases is what makes enforcement of the civil rights laws possible.
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Yes, the NYT once again printed a really big number without any context to make it meaningful for readers. It told us in a headline of an article on efforts to craft a compromise between conservative and moderate members on a new health care bill, that the latest proposal adds $8 billion to cover the cost of providing care to less healthy people.
Is $8 billion a lot of money?
Well, one thing not answered in the article is the time period over which this $8 billion would be spent. Is this a one year number? Is it a ten year total? The article doesn’t give an answer to this basic question.
To get some idea of the need, the average cost of treating the 10 percent least healthy people is more than $50,000 a year per person. This means that on an annual basis the cost of treating the 30 million least healthy people in the country would be over $1.5 trillion. Many of these people are getting Medicare, Medicaid, or employer provided insurance, but if one-third of them showed up in the high risk pools, then their costs would be over $500 billion a year.
In this case, if the $8 billion is a one-year figure, it will cover 1.6 percent of the cost of treating this population. On the other hand, if it is a ten-year figure it will cover 0.16 percent of the cost of treating the less healthy people who show up in high risk pools. Either way, it is a tiny fraction of the cost, but it would still be nice to know which one it us.
Yes, the NYT once again printed a really big number without any context to make it meaningful for readers. It told us in a headline of an article on efforts to craft a compromise between conservative and moderate members on a new health care bill, that the latest proposal adds $8 billion to cover the cost of providing care to less healthy people.
Is $8 billion a lot of money?
Well, one thing not answered in the article is the time period over which this $8 billion would be spent. Is this a one year number? Is it a ten year total? The article doesn’t give an answer to this basic question.
To get some idea of the need, the average cost of treating the 10 percent least healthy people is more than $50,000 a year per person. This means that on an annual basis the cost of treating the 30 million least healthy people in the country would be over $1.5 trillion. Many of these people are getting Medicare, Medicaid, or employer provided insurance, but if one-third of them showed up in the high risk pools, then their costs would be over $500 billion a year.
In this case, if the $8 billion is a one-year figure, it will cover 1.6 percent of the cost of treating this population. On the other hand, if it is a ten-year figure it will cover 0.16 percent of the cost of treating the less healthy people who show up in high risk pools. Either way, it is a tiny fraction of the cost, but it would still be nice to know which one it us.
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Both the overall and core deflators for personal consumption expenditures (PCE) fell in March. This brought the change in the core PCE deflator over the last year down to 1.6 percent. The Fed officially targets a 2.0 percent as an average rate. This means that it wants inflation to occasionally be above 2.0 percent in order to average out the times when it is below 2.0 percent. That should mean that it would want to see the inflation rate accelerate slightly to meet this target.
The Fed is widely expected to raise interest rates at least twice more in 2017 and quite likely three times. With inflation well below its target rate, it is reasonable to ask why?
Just to remind folks, this is not an argument about a baseball box score. The point of raising interest rates is to slow the economy and keep people from getting jobs. Also, by keeping labor markets weaker, higher interest rates prevent workers from getting higher pay increases. So, this does matter.
Both the overall and core deflators for personal consumption expenditures (PCE) fell in March. This brought the change in the core PCE deflator over the last year down to 1.6 percent. The Fed officially targets a 2.0 percent as an average rate. This means that it wants inflation to occasionally be above 2.0 percent in order to average out the times when it is below 2.0 percent. That should mean that it would want to see the inflation rate accelerate slightly to meet this target.
The Fed is widely expected to raise interest rates at least twice more in 2017 and quite likely three times. With inflation well below its target rate, it is reasonable to ask why?
Just to remind folks, this is not an argument about a baseball box score. The point of raising interest rates is to slow the economy and keep people from getting jobs. Also, by keeping labor markets weaker, higher interest rates prevent workers from getting higher pay increases. So, this does matter.
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For some reason the Washington Post has trouble just telling us what Donald Trump says and does. It instead feels the need to go beyond this to make all sorts of inferences that are not supported by evidence.
Tonight we are told in a headline that, “Trump guarantees protection for those with preexisting medical conditions — but it’s unclear how.” This should have been written “Trump says he guarantees protection for those with preexisting medical conditions — but it’s unclear how.”
Someone reading the headline quickly might have thought that Trump actually made some sort of guarantee of providing health care insurance to people with preexisting conditions. He didn’t.
For some reason the Washington Post has trouble just telling us what Donald Trump says and does. It instead feels the need to go beyond this to make all sorts of inferences that are not supported by evidence.
Tonight we are told in a headline that, “Trump guarantees protection for those with preexisting medical conditions — but it’s unclear how.” This should have been written “Trump says he guarantees protection for those with preexisting medical conditions — but it’s unclear how.”
Someone reading the headline quickly might have thought that Trump actually made some sort of guarantee of providing health care insurance to people with preexisting conditions. He didn’t.
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Steven Rattner went full Trump in his criticisms of Donald Trump’s tax cut plans in a NYT column this morning. Essentially, Rattner blamed the 1981–82 recession on Reagan’s tax cuts. The piece tells readers:
“For its part, the Reagan tax cut increased the budget deficit, helping elevate interest rates over 20 percent, which in turn contributed to the double-dip recession that ensued. The stock market fell by more than 20 percent.”
This hugely misrepresents the situation in 1981. Inflation had reached double-digit rates at the end of the 1970s due to the jump in world oil prices caused by the Iranian revolution. (Millions of barrels of daily exports were removed from world markets.)
Federal Reserve Chair Paul Volcker was determined to reduce inflation to low single digit rates. He jacked up interest rates to slow the economy before Reagan was even in the White House. The federal funds rate peaked at just under 19 percent in December of 1980. This rise in the federal funds rate is what caused the recession and the stock market plunge. (The stock market subsequently soared. This was arguably a result of Reagan’s tax cuts to the rich and corporations. The stock market measures the expected future value of after-tax corporate profits; it is not a measure of economic well-being.)
There are few, if any, economists who would blame the 1981–82 recession on the Reagan tax cuts. It is unfortunate that Rattner apparently feels he has to make this claim to argue against the Trump tax cuts.
It is also worth noting that Rattner’s concern about the government debt is hugely misplaced. The ratio of debt service to GDP is around 0.9 percent, near a post-war low. By comparison, it was over 3.0 percent of GDP in the early and mid-1990s. This is the burden the debt places on the economy.
Rattner also ignores patent and copyright rents. This is an alternative way in which the government imposes burdens on the public to pay for items. At present, patent rents in prescription drugs alone come to close to $400 billion a year, more than 2 percent of GDP. This is the difference between the patent protected price of drugs and the free market price. Effectively, patent and copyright monopolies are privately collected taxes. An honest analyst would have to include the effect of these monopolies in assessing the burden the government is creating for taxpayers in the future.
Steven Rattner went full Trump in his criticisms of Donald Trump’s tax cut plans in a NYT column this morning. Essentially, Rattner blamed the 1981–82 recession on Reagan’s tax cuts. The piece tells readers:
“For its part, the Reagan tax cut increased the budget deficit, helping elevate interest rates over 20 percent, which in turn contributed to the double-dip recession that ensued. The stock market fell by more than 20 percent.”
This hugely misrepresents the situation in 1981. Inflation had reached double-digit rates at the end of the 1970s due to the jump in world oil prices caused by the Iranian revolution. (Millions of barrels of daily exports were removed from world markets.)
Federal Reserve Chair Paul Volcker was determined to reduce inflation to low single digit rates. He jacked up interest rates to slow the economy before Reagan was even in the White House. The federal funds rate peaked at just under 19 percent in December of 1980. This rise in the federal funds rate is what caused the recession and the stock market plunge. (The stock market subsequently soared. This was arguably a result of Reagan’s tax cuts to the rich and corporations. The stock market measures the expected future value of after-tax corporate profits; it is not a measure of economic well-being.)
There are few, if any, economists who would blame the 1981–82 recession on the Reagan tax cuts. It is unfortunate that Rattner apparently feels he has to make this claim to argue against the Trump tax cuts.
It is also worth noting that Rattner’s concern about the government debt is hugely misplaced. The ratio of debt service to GDP is around 0.9 percent, near a post-war low. By comparison, it was over 3.0 percent of GDP in the early and mid-1990s. This is the burden the debt places on the economy.
Rattner also ignores patent and copyright rents. This is an alternative way in which the government imposes burdens on the public to pay for items. At present, patent rents in prescription drugs alone come to close to $400 billion a year, more than 2 percent of GDP. This is the difference between the patent protected price of drugs and the free market price. Effectively, patent and copyright monopolies are privately collected taxes. An honest analyst would have to include the effect of these monopolies in assessing the burden the government is creating for taxpayers in the future.
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