In his column today Thomas Friedman was reasonably arguing for stronger supports for workers who are transitioning between jobs. However, the fundamental premise of his piece, that:
“every worker today will most likely have to transition multiple times to multiple jobs as the pace of change accelerates,”
…directly contradicts the economic assumptions used by the Congressional Budget Office (CBO) and other official forecasters.
While Friedman is asserting that pace of change in the economy will accelerate, in its most recent budget projections, which were highlighted in a front page story in the New York Times, CBO assumed that the pace of change in the economy would slow over the next decade. CBO assumed potential productivity growth will average just 1.3 percent annually over the next decade. This is down from an average of 1.7 percent over the period from 1950 to 2016, and a peak of 2.4 percent annual growth from 1950 to 1973 (Table 2-3).
Of course, it is possible that Friedman will be right and we may see a pace of change equal to the 1.6 percent long period average or even the 2.4 percent rate of the 1950s and 1960s. However, if this is true, then CBO has hugely over-estimated the size of the budget deficits we will be seeing in the next decade. Higher productivity growth will mean more economic growth and more tax revenue and therefore low budget deficits. In other words, if Friedman’s claims about accelerating productivity growth are taken seriously, we have no reason to be worried about budget deficits.
In his column today Thomas Friedman was reasonably arguing for stronger supports for workers who are transitioning between jobs. However, the fundamental premise of his piece, that:
“every worker today will most likely have to transition multiple times to multiple jobs as the pace of change accelerates,”
…directly contradicts the economic assumptions used by the Congressional Budget Office (CBO) and other official forecasters.
While Friedman is asserting that pace of change in the economy will accelerate, in its most recent budget projections, which were highlighted in a front page story in the New York Times, CBO assumed that the pace of change in the economy would slow over the next decade. CBO assumed potential productivity growth will average just 1.3 percent annually over the next decade. This is down from an average of 1.7 percent over the period from 1950 to 2016, and a peak of 2.4 percent annual growth from 1950 to 1973 (Table 2-3).
Of course, it is possible that Friedman will be right and we may see a pace of change equal to the 1.6 percent long period average or even the 2.4 percent rate of the 1950s and 1960s. However, if this is true, then CBO has hugely over-estimated the size of the budget deficits we will be seeing in the next decade. Higher productivity growth will mean more economic growth and more tax revenue and therefore low budget deficits. In other words, if Friedman’s claims about accelerating productivity growth are taken seriously, we have no reason to be worried about budget deficits.
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Richard Gonzales, NPR’s ombudsman, addressed the question of why NPR does not say that Donald Trump is lying when he says something that is clearly not true. The immediate point of reference was Trump’s assertion to an audience at the CIA that the media had invented the feud between Trump and the intelligence agencies, even though Trump had repeatedly made harsh public comments directed at them.
Gonzales commented:
“On Morning Edition, Kelly [NPR reporter Mary Louise Kelly] explains why. She says she went to the Oxford English Dictionary seeking the definition of ‘lie.’
“‘A false statement made with intent to deceive,’ Kelly says. ‘Intent being the key word there. Without the ability to peer into Donald Trump’s head, I can’t tell you what his intent was. I can tell you what he said and how that squares, or doesn’t, with facts.’
“NPR’s senior vice president for news, Michael Oreskes, says NPR has decided not to use the word ‘lie’ and that Kelly got it right by avoiding that word.”
While it is a good practice for reporters not to attempt to tell their audiences what is in a politician’s head, this is not standard practice at either NPR or other news outlets. It is in fact quite common for reporters to tell us that politicians “believe” or are “concerned” about a particular issue or event.
For example, just yesterday NPR ran a segment on the budget which told us what Republicans “believe:”
“The House GOP’s plan, as outlined, would add to the deficit in that it would very likely result in less revenue coming in, but Republicans believe their tax overhaul would generate significant economic growth to make up the difference.”
I frequently complain about this sort of mind reading in Beat the Press (e.g here, here, and here). As Ms. Kelly and Mr. Oreskes said, reporters lack the ability to peer in politicians heads to determine what they are really thinking. Unfortunately, they have a tendency to claim that they do in their reporting.
It is understandable that NPR does not want to claim that it knows the state of Donald Trump’s mind. It would be a huge step forward if it would apply this standard in its reporting more generally.
Thanks to Keane Bhatt for calling this to my attention.
Richard Gonzales, NPR’s ombudsman, addressed the question of why NPR does not say that Donald Trump is lying when he says something that is clearly not true. The immediate point of reference was Trump’s assertion to an audience at the CIA that the media had invented the feud between Trump and the intelligence agencies, even though Trump had repeatedly made harsh public comments directed at them.
Gonzales commented:
“On Morning Edition, Kelly [NPR reporter Mary Louise Kelly] explains why. She says she went to the Oxford English Dictionary seeking the definition of ‘lie.’
“‘A false statement made with intent to deceive,’ Kelly says. ‘Intent being the key word there. Without the ability to peer into Donald Trump’s head, I can’t tell you what his intent was. I can tell you what he said and how that squares, or doesn’t, with facts.’
“NPR’s senior vice president for news, Michael Oreskes, says NPR has decided not to use the word ‘lie’ and that Kelly got it right by avoiding that word.”
While it is a good practice for reporters not to attempt to tell their audiences what is in a politician’s head, this is not standard practice at either NPR or other news outlets. It is in fact quite common for reporters to tell us that politicians “believe” or are “concerned” about a particular issue or event.
For example, just yesterday NPR ran a segment on the budget which told us what Republicans “believe:”
“The House GOP’s plan, as outlined, would add to the deficit in that it would very likely result in less revenue coming in, but Republicans believe their tax overhaul would generate significant economic growth to make up the difference.”
I frequently complain about this sort of mind reading in Beat the Press (e.g here, here, and here). As Ms. Kelly and Mr. Oreskes said, reporters lack the ability to peer in politicians heads to determine what they are really thinking. Unfortunately, they have a tendency to claim that they do in their reporting.
It is understandable that NPR does not want to claim that it knows the state of Donald Trump’s mind. It would be a huge step forward if it would apply this standard in its reporting more generally.
Thanks to Keane Bhatt for calling this to my attention.
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The NYT did not bother conceal its enthusiasm for the Trans-Pacific Partnership (TPP) in a news article reporting on President Trump’s decision to kill the pact. It repeatedly referred to the TPP as a “free trade” pact, an inaccurate term chosen by its proponents to help promote the deal.
In fact, the TPP is largely protectionist, calling for stronger and longer patent and copyright related protections. While the article notes this fact, it doesn’t acknowledge that these incredibly costly forms of protection (which redistribute income upward) are in conflict with principles of free trade and open markets.
The piece also repeats claims from proponents of the TPP that the defeat of the agreement will be a big gain for China at the expense of the United States. It would have been helpful to point out that all of these proponents of the TPP favored bringing China in the WTO with few conditions. This act helped to expand China’s economic power enormously.
The NYT did not bother conceal its enthusiasm for the Trans-Pacific Partnership (TPP) in a news article reporting on President Trump’s decision to kill the pact. It repeatedly referred to the TPP as a “free trade” pact, an inaccurate term chosen by its proponents to help promote the deal.
In fact, the TPP is largely protectionist, calling for stronger and longer patent and copyright related protections. While the article notes this fact, it doesn’t acknowledge that these incredibly costly forms of protection (which redistribute income upward) are in conflict with principles of free trade and open markets.
The piece also repeats claims from proponents of the TPP that the defeat of the agreement will be a big gain for China at the expense of the United States. It would have been helpful to point out that all of these proponents of the TPP favored bringing China in the WTO with few conditions. This act helped to expand China’s economic power enormously.
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Both the Washington Post and New York Times had pieces about declining support for the left in France and the rise of a nationalist right in both Italy and France. Both pieces attributed the rise in support for the right to people losing from globalization, implying that this is some impersonal process that is causing these people to be losers.
In fact, the losers are suffering because of the insistence of the European Union that its members pursue austerity policies. These policies have led to almost a full decade of near zero per capita GDP growth in France and a drop of more than 10 percent in per capita GDP in Italy. There is nothing inevitable about these policies; they are conscious choices of the political leaders in Europe.
It is incredible that both the Post and Times would neglect to mention the role of austerity in hurting workers. The disgust with elites is understandable.
Both the Washington Post and New York Times had pieces about declining support for the left in France and the rise of a nationalist right in both Italy and France. Both pieces attributed the rise in support for the right to people losing from globalization, implying that this is some impersonal process that is causing these people to be losers.
In fact, the losers are suffering because of the insistence of the European Union that its members pursue austerity policies. These policies have led to almost a full decade of near zero per capita GDP growth in France and a drop of more than 10 percent in per capita GDP in Italy. There is nothing inevitable about these policies; they are conscious choices of the political leaders in Europe.
It is incredible that both the Post and Times would neglect to mention the role of austerity in hurting workers. The disgust with elites is understandable.
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The NYT reported that the people at the gathering of the super rich at Davos are concerned because the population of major democracies no longer buy the lies they tell to justify upward redistribution of income. It told readers:
“At cocktail parties where the Champagne flows, financiers have expressed bewilderment over the rise of populist groups that are feeding a backlash against globalization. ….
“The world order has been upended. As the United States retreats from the promise of free trade, China is taking up the mantle. …..”
“The religion of the global elite — free trade and open markets — is under attack, and there has been a lot of hand-wringing over what Christine Lagarde of the International Monetary Fund has declared a ‘middle-class crisis.'”
Of course, the Davos elite do not have a religion of free trade. They are entirely happy with every longer and stronger patent and copyright protections, which is a main goal of the Trans-Pacific Partnership and other recent trade pacts.
The Davos elite also have no objections to protectionist measures, like the U.S. ban on foreign doctors who have not completed a U.S. residency program. This protectionist barrier adds as much as $100 billion a year (@ $700 per family) to the country’s health care bill.
Since these measures redistribute income upward to people like them, the Davos elite is perfectly happy with them. They only object to protectionist measures which are intended to help ordinary workers.
The concern in Davos is that the public in western democracies no longer buys the lie that they are committed to the public good rather than lining their pockets. It is nice that the NYT is apparently trying to assist the elite by asserting that they have an interest in “free trade,” but it is not likely to help their case much.
Yeah, I am plugging my book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (it’s free).
The NYT reported that the people at the gathering of the super rich at Davos are concerned because the population of major democracies no longer buy the lies they tell to justify upward redistribution of income. It told readers:
“At cocktail parties where the Champagne flows, financiers have expressed bewilderment over the rise of populist groups that are feeding a backlash against globalization. ….
“The world order has been upended. As the United States retreats from the promise of free trade, China is taking up the mantle. …..”
“The religion of the global elite — free trade and open markets — is under attack, and there has been a lot of hand-wringing over what Christine Lagarde of the International Monetary Fund has declared a ‘middle-class crisis.'”
Of course, the Davos elite do not have a religion of free trade. They are entirely happy with every longer and stronger patent and copyright protections, which is a main goal of the Trans-Pacific Partnership and other recent trade pacts.
The Davos elite also have no objections to protectionist measures, like the U.S. ban on foreign doctors who have not completed a U.S. residency program. This protectionist barrier adds as much as $100 billion a year (@ $700 per family) to the country’s health care bill.
Since these measures redistribute income upward to people like them, the Davos elite is perfectly happy with them. They only object to protectionist measures which are intended to help ordinary workers.
The concern in Davos is that the public in western democracies no longer buys the lie that they are committed to the public good rather than lining their pockets. It is nice that the NYT is apparently trying to assist the elite by asserting that they have an interest in “free trade,” but it is not likely to help their case much.
Yeah, I am plugging my book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (it’s free).
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They said it couldn’t be done. It would be like the Pope converting to Islam, but the Washington Post did the impossible. It headlined an article on reports that Donald Trump wants to privatize the Corporation for Public Broadcasting and eliminate altogether the National Endowments for the Arts and Humanities:
“Trump reportedly wants to cut cultural programs that make up 0.02 percent of federal spending.”
This is an incredible breakthrough. The Post has religiously followed a policy of reporting on the budget by using really big numbers that are virtually meaningless to the vast majority of their readers. One result is that people, including well-educated and liberal people, tend to grossly over-estimate the portion of the budget that goes to things like TANF (@ 0.4 percent), foreign aid (@ 0.7 percent), and food stamps (@1.8 percent).
The fact that it uses really big numbers rather than express these items in some context feeds the claims of right-wingers that we are being overtaxed to support these programs. It also contributes to the absurd belief that large numbers of people are not working but rather surviving comfortably on relatively meager benefits.
It’s too bad it took getting Donald Trump in the White House to get the paper to do some serious budget reporting.
They said it couldn’t be done. It would be like the Pope converting to Islam, but the Washington Post did the impossible. It headlined an article on reports that Donald Trump wants to privatize the Corporation for Public Broadcasting and eliminate altogether the National Endowments for the Arts and Humanities:
“Trump reportedly wants to cut cultural programs that make up 0.02 percent of federal spending.”
This is an incredible breakthrough. The Post has religiously followed a policy of reporting on the budget by using really big numbers that are virtually meaningless to the vast majority of their readers. One result is that people, including well-educated and liberal people, tend to grossly over-estimate the portion of the budget that goes to things like TANF (@ 0.4 percent), foreign aid (@ 0.7 percent), and food stamps (@1.8 percent).
The fact that it uses really big numbers rather than express these items in some context feeds the claims of right-wingers that we are being overtaxed to support these programs. It also contributes to the absurd belief that large numbers of people are not working but rather surviving comfortably on relatively meager benefits.
It’s too bad it took getting Donald Trump in the White House to get the paper to do some serious budget reporting.
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It seems being great again ain’t what it used to be. On its first day in office, the Trump administration is pushing an “America First Energy Plan,” which it tells us will “increasing wages by more than $30 billion over the next 7 years.”
For those who don’t happen to know offhand how large $30 billion is relative to projected wages over this period, the Congressional Budget Office tells us that we can expect the cumulative wage bill to be roughly $69,700 billion over the years 2018–2024. This means that the $30 billion wage dividend from removing all those nasty environmental restrictions amount to 0.04 percent of projected wages over this period. For a person earning $50,000 a year, this means Trump’s plan will get them another $20 a year, according to the Trump administration’s projection.
Of course, this doesn’t factor in any costs that might be associated with things like increasing incidences of asthma, heart disease, cancer, or other diseases associated with pollution. Nor does it factor in any losses that workers may experience as result of natural areas being destroyed or made unsuitable for hiking, hunting, fishing or other types of recreation.
It seems being great again ain’t what it used to be. On its first day in office, the Trump administration is pushing an “America First Energy Plan,” which it tells us will “increasing wages by more than $30 billion over the next 7 years.”
For those who don’t happen to know offhand how large $30 billion is relative to projected wages over this period, the Congressional Budget Office tells us that we can expect the cumulative wage bill to be roughly $69,700 billion over the years 2018–2024. This means that the $30 billion wage dividend from removing all those nasty environmental restrictions amount to 0.04 percent of projected wages over this period. For a person earning $50,000 a year, this means Trump’s plan will get them another $20 a year, according to the Trump administration’s projection.
Of course, this doesn’t factor in any costs that might be associated with things like increasing incidences of asthma, heart disease, cancer, or other diseases associated with pollution. Nor does it factor in any losses that workers may experience as result of natural areas being destroyed or made unsuitable for hiking, hunting, fishing or other types of recreation.
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The NYT did a great service for the Davos elite in a piece that ostensibly criticized them for being unwilling to support fundamental change that would give more power to ordinary workers. It told readers:
“Davos is — at least rhetorically — consumed with worries about the shortcomings of globalization. About the deepening anxieties of the middle class in many developed economies. About the threat of trade protectionism and its attendant hit to economic growth.”
This is 180 degrees at odds with reality. The Davos elite have been the most enthusiastic supporters of stronger and longer patent and copyright protections. These protections raise the price of the protected items by tens or even hundreds of times their free market price. This is the equivalent of tariffs of several thousand or even tens of thousands of percent. (Davos mainstay Bill Gates is one of the main beneficiaries of this protectionism.)
These forms of protectionism have the same effect on economic growth as the tariffs that supposedly bother the Davos set so much, except their impact is far larger. This is most notable in the case of prescription drugs. The United States spends $430 billion a year on drugs that would likely cost around $60 billion in a free market. While patent and copyrights provide an incentive for research and creative work, there are almost certainly more efficient mechanisms for accomplishing this task. (See my [free] book Rigged, chapter 5.) As an example of a more efficient route, Forbes recently ran a piece arguing for the greater efficiency of a government takeover of the company Gilead Sciences so that it could make its Hepatitis C drug Sovaldi (list price $84,000) available for free to patients.
The Davos elite are just fine with this protectionism and in fact have consistently sought to expand it in trade deals like the Trans-Pacific Partnership or the TRIPs provisions of the WTO. They seem utterly unconcerned about its negative impact on growth.
The Davos elite are also unconcerned about protectionism that benefits highly paid professionals like doctors and dentists. The United States bars hundreds of thousands of highly qualified doctors by requiring that they first complete a residency program in the United States. As a result of this protectionism we pay our doctors twice as much as the average for other wealthy countries, adding more than $80 billion a year to our health care bill.
For these reasons, it is 180 degrees wrong to describe the Davos elite as being opposed to protectionism. While they surely like to be portrayed as free traders, it is not true. They support protectionism as long as it redistributes money from the rest of the world to people like them.
The NYT did a great service for the Davos elite in a piece that ostensibly criticized them for being unwilling to support fundamental change that would give more power to ordinary workers. It told readers:
“Davos is — at least rhetorically — consumed with worries about the shortcomings of globalization. About the deepening anxieties of the middle class in many developed economies. About the threat of trade protectionism and its attendant hit to economic growth.”
This is 180 degrees at odds with reality. The Davos elite have been the most enthusiastic supporters of stronger and longer patent and copyright protections. These protections raise the price of the protected items by tens or even hundreds of times their free market price. This is the equivalent of tariffs of several thousand or even tens of thousands of percent. (Davos mainstay Bill Gates is one of the main beneficiaries of this protectionism.)
These forms of protectionism have the same effect on economic growth as the tariffs that supposedly bother the Davos set so much, except their impact is far larger. This is most notable in the case of prescription drugs. The United States spends $430 billion a year on drugs that would likely cost around $60 billion in a free market. While patent and copyrights provide an incentive for research and creative work, there are almost certainly more efficient mechanisms for accomplishing this task. (See my [free] book Rigged, chapter 5.) As an example of a more efficient route, Forbes recently ran a piece arguing for the greater efficiency of a government takeover of the company Gilead Sciences so that it could make its Hepatitis C drug Sovaldi (list price $84,000) available for free to patients.
The Davos elite are just fine with this protectionism and in fact have consistently sought to expand it in trade deals like the Trans-Pacific Partnership or the TRIPs provisions of the WTO. They seem utterly unconcerned about its negative impact on growth.
The Davos elite are also unconcerned about protectionism that benefits highly paid professionals like doctors and dentists. The United States bars hundreds of thousands of highly qualified doctors by requiring that they first complete a residency program in the United States. As a result of this protectionism we pay our doctors twice as much as the average for other wealthy countries, adding more than $80 billion a year to our health care bill.
For these reasons, it is 180 degrees wrong to describe the Davos elite as being opposed to protectionism. While they surely like to be portrayed as free traders, it is not true. They support protectionism as long as it redistributes money from the rest of the world to people like them.
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The NYT had a strange editorial this morning on the World Economic Forum in Davos in which it posed the question:
“The question now is whether these gilded champions of globalization will choose to address inequality or proceed with the business of wining and dining as usual.”
It is difficult to understand why anyone would expect this group of people, who are there primarily because they are super rich, to be leaders in the fight against inequality. This is especially bizarre when we remember that many (most?) of the super rich got their wealth by rigging the rules so that they could profit at the expense of the rest of society.
The list of people in this category starts at the top. Bill Gates owes his enormous wealth to a near monopoly (less today than ten or twenty years ago) on the operating system in personal computers. This would not have been allowed back in the days when anti-trust laws were being enforced.
Other Davos characters owe their wealth to government granted patent and copyright monopolies which they lobby to make ever stronger and longer. Others owe their wealth to financial dealings that would not be possible without free government too big to fail insurance and the exemption of the financial sector from the sort of sales taxes paid by other sectors. (Yes, I am repeating the themes of my book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer [it’s free].)
It’s difficult to see why anyone would expect policy guidance on anything other than securing the wealth of the super wealthy from this sort of gathering. Would we expect major advancements on animal rights from a gathering of hunters?
In a measure of how out of touch this crew is with reality the NYT tells us:
“Also on the agenda is a preoccupation from last year that automation will soon put millions of people out of work.”
While it is of course possible that automation will lead to a sharp uptick in productivity growth, in fact most countries, including the United States have been struggling with very low productivity growth over the last decade. Most economists have been concerned that slow productivity growth would persist for the indefinite future. This is the basis for concern about government budget deficits (at least for folks who know economics) as well as the reason some folks worry about an aging population. This is also the reason the Federal Reserve Board raised interest rates: it was concerned about too many jobs, not too few.
Anyhow, there is nothing wrong with some shysters fleecing the super rich with silly stories about massive job loss due to automation, but that is not the sort of thing that serious people need concern themselves with.
The NYT had a strange editorial this morning on the World Economic Forum in Davos in which it posed the question:
“The question now is whether these gilded champions of globalization will choose to address inequality or proceed with the business of wining and dining as usual.”
It is difficult to understand why anyone would expect this group of people, who are there primarily because they are super rich, to be leaders in the fight against inequality. This is especially bizarre when we remember that many (most?) of the super rich got their wealth by rigging the rules so that they could profit at the expense of the rest of society.
The list of people in this category starts at the top. Bill Gates owes his enormous wealth to a near monopoly (less today than ten or twenty years ago) on the operating system in personal computers. This would not have been allowed back in the days when anti-trust laws were being enforced.
Other Davos characters owe their wealth to government granted patent and copyright monopolies which they lobby to make ever stronger and longer. Others owe their wealth to financial dealings that would not be possible without free government too big to fail insurance and the exemption of the financial sector from the sort of sales taxes paid by other sectors. (Yes, I am repeating the themes of my book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer [it’s free].)
It’s difficult to see why anyone would expect policy guidance on anything other than securing the wealth of the super wealthy from this sort of gathering. Would we expect major advancements on animal rights from a gathering of hunters?
In a measure of how out of touch this crew is with reality the NYT tells us:
“Also on the agenda is a preoccupation from last year that automation will soon put millions of people out of work.”
While it is of course possible that automation will lead to a sharp uptick in productivity growth, in fact most countries, including the United States have been struggling with very low productivity growth over the last decade. Most economists have been concerned that slow productivity growth would persist for the indefinite future. This is the basis for concern about government budget deficits (at least for folks who know economics) as well as the reason some folks worry about an aging population. This is also the reason the Federal Reserve Board raised interest rates: it was concerned about too many jobs, not too few.
Anyhow, there is nothing wrong with some shysters fleecing the super rich with silly stories about massive job loss due to automation, but that is not the sort of thing that serious people need concern themselves with.
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