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Paul Krugman told readers that intellectual types like him tend to vote for progressive taxes and other measures that benefit white working class people. This is only partly true.
People with college and advanced degrees tend to be strong supporters of recent trade deals [I’m including China’s entry to the WTO] that have been a major factor in the loss of manufacturing jobs in the last quarter century, putting downward pressure on the pay of workers without college degrees. They also tend to support stronger and longer patent and copyright protections (partly in trade deals), which also redistribute income upward. (We will pay $430 billion for prescription drugs this year, which would cost 10 to 20 percent of this amount in a free market. The difference is equal to roughly five times annual spending on food stamps.)
Educated people also tended to support the deregulation of the financial sector, which has led to some of the largest fortunes in the country. They also overwhelmingly supported the 2008 bailout which threw a lifeline to the Wall Street banks at a time when the market was going to condemn them to the dustbin of history. (Sorry, the second Great Depression story as the alternative is nonsense — that would have required a decade of stupid policy, nothing about the financial collapse itself would have entailed a second Great Depression.)
His crew has also been at best lukewarm on defending unions. However, they don’t seem to like free trade in professional services that would, for example, allow more foreign doctors to practice in the United States, bringing their pay in line with doctors in Europe and Canada. The lower pay for doctors alone could save us close to $100 billion a year in health care expenses.
None of this means that the plutocrats standing alongside Trump are somehow better for working class people. They have made it pretty clear that they intend to use his presidency to take everything they can from the rest of the country. But Krugman is engaging in some serious fanciful thinking if he thinks that intellectual types have in general been acting in the interests of the working class. (And, I suspect many do ridicule the behavior and lifestyles of the working class.)
Yes, all of this is talked about in my new book Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer (it’s free).
Paul Krugman told readers that intellectual types like him tend to vote for progressive taxes and other measures that benefit white working class people. This is only partly true.
People with college and advanced degrees tend to be strong supporters of recent trade deals [I’m including China’s entry to the WTO] that have been a major factor in the loss of manufacturing jobs in the last quarter century, putting downward pressure on the pay of workers without college degrees. They also tend to support stronger and longer patent and copyright protections (partly in trade deals), which also redistribute income upward. (We will pay $430 billion for prescription drugs this year, which would cost 10 to 20 percent of this amount in a free market. The difference is equal to roughly five times annual spending on food stamps.)
Educated people also tended to support the deregulation of the financial sector, which has led to some of the largest fortunes in the country. They also overwhelmingly supported the 2008 bailout which threw a lifeline to the Wall Street banks at a time when the market was going to condemn them to the dustbin of history. (Sorry, the second Great Depression story as the alternative is nonsense — that would have required a decade of stupid policy, nothing about the financial collapse itself would have entailed a second Great Depression.)
His crew has also been at best lukewarm on defending unions. However, they don’t seem to like free trade in professional services that would, for example, allow more foreign doctors to practice in the United States, bringing their pay in line with doctors in Europe and Canada. The lower pay for doctors alone could save us close to $100 billion a year in health care expenses.
None of this means that the plutocrats standing alongside Trump are somehow better for working class people. They have made it pretty clear that they intend to use his presidency to take everything they can from the rest of the country. But Krugman is engaging in some serious fanciful thinking if he thinks that intellectual types have in general been acting in the interests of the working class. (And, I suspect many do ridicule the behavior and lifestyles of the working class.)
Yes, all of this is talked about in my new book Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer (it’s free).
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In an article discussing the Trump administration’s attitudes toward unions, the Washington Post misrepresented so-called right-to-work laws.
“Some union leaders are worried that a Trump administration would attempt to introduce a national right-to-work law — allowing any employee anywhere to exempt themselves from participating in a union — and block unions from deducting dues from paychecks.”
Workers already have the option not to participate in a union. Workers cannot be compelled to join a union anywhere in the United States. They currently can be required to pay a representation fee in a workplace represented by a union. Under the law, a union is obligated to represent all the workers in a bargaining unit, whether or not they join the union. This means that all workers will benefit in the same way from the wages and benefits negotiated by the union. Also, the union is obligated to defend a worker in disciplinary matters or other individual issues even if they are not members of the union.
The issue is whether workers can be obligated to pay for this representation or have the option to get it for free. Twenty-six states now deny workers the right to negotiate contracts that require all workers to pay for the representation they get from a union. Apparently, some of those associated with Trump also want to prohibit workers from negotiating contracts under which the employer deducts union dues as a service to the union.
This is an issue about freedom of contract, where the government is limiting what sort of contracts unions can sign with an employer. It is not an issue about individual rights. Any worker who doesn’t like unions has the option to work at a workplace where employees are not represented by a union. Just as an employer can impose conditions on workers (for example, wearing a silly uniform or requiring workers to address customers in a particular way), current law allows contracts under which workers set conditions on employment for their co-workers. Apparently, people associated with Trump want to take away this right.
In an article discussing the Trump administration’s attitudes toward unions, the Washington Post misrepresented so-called right-to-work laws.
“Some union leaders are worried that a Trump administration would attempt to introduce a national right-to-work law — allowing any employee anywhere to exempt themselves from participating in a union — and block unions from deducting dues from paychecks.”
Workers already have the option not to participate in a union. Workers cannot be compelled to join a union anywhere in the United States. They currently can be required to pay a representation fee in a workplace represented by a union. Under the law, a union is obligated to represent all the workers in a bargaining unit, whether or not they join the union. This means that all workers will benefit in the same way from the wages and benefits negotiated by the union. Also, the union is obligated to defend a worker in disciplinary matters or other individual issues even if they are not members of the union.
The issue is whether workers can be obligated to pay for this representation or have the option to get it for free. Twenty-six states now deny workers the right to negotiate contracts that require all workers to pay for the representation they get from a union. Apparently, some of those associated with Trump also want to prohibit workers from negotiating contracts under which the employer deducts union dues as a service to the union.
This is an issue about freedom of contract, where the government is limiting what sort of contracts unions can sign with an employer. It is not an issue about individual rights. Any worker who doesn’t like unions has the option to work at a workplace where employees are not represented by a union. Just as an employer can impose conditions on workers (for example, wearing a silly uniform or requiring workers to address customers in a particular way), current law allows contracts under which workers set conditions on employment for their co-workers. Apparently, people associated with Trump want to take away this right.
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A NYT article that discussed Donald Trump’s conflict-of-interest problem because of his business empire somehow couldn’t find anyone who knew a way to do it without forcing him to risk selling it a large loss. Actually there are fun and easy way- to allow Donald Trump to quickly eliminate his conflict-of-interest problem without risking large losses. The article should have pointed out this fact to readers so they fully recognize how extraordinary Trump’s behavior is in ignoring his conflict-of-interest problem.
A NYT article that discussed Donald Trump’s conflict-of-interest problem because of his business empire somehow couldn’t find anyone who knew a way to do it without forcing him to risk selling it a large loss. Actually there are fun and easy way- to allow Donald Trump to quickly eliminate his conflict-of-interest problem without risking large losses. The article should have pointed out this fact to readers so they fully recognize how extraordinary Trump’s behavior is in ignoring his conflict-of-interest problem.
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That would have been an appropriate headline for the NYT piece profiling Andrew Puzder, Donald Trump’s pick to be head of the Labor Department. According to the piece, Puzder, who runs a restaurant chain:
“…strongly supports repealing the Affordable Care Act, which he maintains has helped create a ‘restaurant recession’ because rising premiums have left middle- and working-class people with less money to spend dining out.”
In fact, restaurant spending and employment have risen rapidly since the key provisions of the Affordable Care Act (ACA) took effect in January of 2014 as shown in the figure below.
Source: Bureau of Labor Statistics.
Employment in restaurants in the most recent data is nearly 1 million higher than in December of 2013, the month before the health care exchanges created by the ACA began operating. Clearly Mr. Puzder is badly confused about business conditions in the restaurant sector. It would have been appropriate to point this fact out to readers, especially since it is very relevant to the job of the Labor Secretary.
Note: Thanks to Robert Salzberg for calling this to my attention.
That would have been an appropriate headline for the NYT piece profiling Andrew Puzder, Donald Trump’s pick to be head of the Labor Department. According to the piece, Puzder, who runs a restaurant chain:
“…strongly supports repealing the Affordable Care Act, which he maintains has helped create a ‘restaurant recession’ because rising premiums have left middle- and working-class people with less money to spend dining out.”
In fact, restaurant spending and employment have risen rapidly since the key provisions of the Affordable Care Act (ACA) took effect in January of 2014 as shown in the figure below.
Source: Bureau of Labor Statistics.
Employment in restaurants in the most recent data is nearly 1 million higher than in December of 2013, the month before the health care exchanges created by the ACA began operating. Clearly Mr. Puzder is badly confused about business conditions in the restaurant sector. It would have been appropriate to point this fact out to readers, especially since it is very relevant to the job of the Labor Secretary.
Note: Thanks to Robert Salzberg for calling this to my attention.
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The NYT had a column by Nicholas Bagley and Austin Frakt noting the problem that in the current insurance market, all workers at a company get the same plan, regardless of their income. The price of the policy is a much larger share of a low-paid worker’s wage than a high-paid worker’s wage, implying a much larger effect on their after-health care insurance income.
As the column notes, a big part of this story is the high price of new medical technology. It is worth noting this high price is the result of government-granted patent monopolies. If the research were paid for up front by the government (it could be done by private companies under contract) the technology would be cheap in almost all cases. The differences between the cost of the most modern scanning equipment and an old-fashioned x-ray would be trivial and new drugs would be available at the same price as generics. In other words, this is to a large extent an avoidable problem, although one that cannot be easily addressed because of the power of the affected industries.
The NYT had a column by Nicholas Bagley and Austin Frakt noting the problem that in the current insurance market, all workers at a company get the same plan, regardless of their income. The price of the policy is a much larger share of a low-paid worker’s wage than a high-paid worker’s wage, implying a much larger effect on their after-health care insurance income.
As the column notes, a big part of this story is the high price of new medical technology. It is worth noting this high price is the result of government-granted patent monopolies. If the research were paid for up front by the government (it could be done by private companies under contract) the technology would be cheap in almost all cases. The differences between the cost of the most modern scanning equipment and an old-fashioned x-ray would be trivial and new drugs would be available at the same price as generics. In other words, this is to a large extent an avoidable problem, although one that cannot be easily addressed because of the power of the affected industries.
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The NYT had an article presenting the comments of several people genuflecting over the lack of public support for current trade policy (wrongly referred to as “free trade”). The obvious reason for this lack of support, which is overlooked by those cited in the article, is that the intention and the outcome of trade policy has been to redistribute income upward.
The point of making it as easy as possible to move a factory to Mexico, and then import the output back to the United States, is to get access to low cost labor. The predicted and actual effect of this policy is to reduce the number of jobs available to manufacturing workers in the United States. This puts downward pressure on their wages, as fans of Econ 101 everywhere know. And, since manufacturing is a traditional source of high-wage employment for workers without college degrees, the loss of manufacturing jobs to Mexico and other developing countries puts downward pressure on the wages of non-college educated workers more generally.
For some reason, the NYT and other news outlets never point out that the “free traders” seem to have no problem with protectionist measures that benefit highly-educated professionals. For example, foreign doctors are prohibited from practicing medicine in the United States unless they complete a U.S. residency program. As a result, our doctors are paid twice as much as doctors in other wealthy countries (more than $250,000 a year on average, net of malpractice insurance and other expenses). This costs the country almost $100 billion a year in higher health care costs (@ $700 per family, per year).
We prohibit dentists from practicing in the United States unless they graduate from a U.S. dental school. (Since 2011, graduates of Canadian schools are also allowed to practice here.) These and other protectionist measures inflate the pay of highly educated professionals at great cost to the economy. However, these protectionist barriers never seem to be on the agenda of free traders.
(As many people have pointed out to me, if we simplified the rules so that more foreign professionals could practice in the United States we would get more professionals from developing countries. This could lead to a serious problem of “brain drain” as these countries lose their brightest and most educated people. As I have pointed out many times, we do know how to compensate for this flow of professionals. We could pay the countries from which these people came, so that they would be able to train two or three doctors or other professionals for every one that comes to the U.S. As I have also pointed out, we already get a substantial number of professionals from these countries and provide zero compensation, so it is striking that this concern only arises in the context of a proposal that jeopardizes the pay of high-end professionals.)
It is also important to note that stronger and longer patent and copyright and related protections have been a central part of recent trade deals. These protections are protectionism, the opposite of free trade. They are enormously costly and redistribute income upward. In the case of prescription drugs alone, patent and related protections raise the amount we pay for drugs by around $350 billion annually (@ $2,500 per family, per year) compared with the free market price. Patent monopolies do support research, but there are other more efficient mechanisms for financing research. (Get the full story in my book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. It’s free.)
Anyhow, it is touching to see that elite types are discovering that much of the country is unhappy with policies that were designed to redistribute from them to elite-types. The question we all must ask is, “are our elites learning?”
The NYT had an article presenting the comments of several people genuflecting over the lack of public support for current trade policy (wrongly referred to as “free trade”). The obvious reason for this lack of support, which is overlooked by those cited in the article, is that the intention and the outcome of trade policy has been to redistribute income upward.
The point of making it as easy as possible to move a factory to Mexico, and then import the output back to the United States, is to get access to low cost labor. The predicted and actual effect of this policy is to reduce the number of jobs available to manufacturing workers in the United States. This puts downward pressure on their wages, as fans of Econ 101 everywhere know. And, since manufacturing is a traditional source of high-wage employment for workers without college degrees, the loss of manufacturing jobs to Mexico and other developing countries puts downward pressure on the wages of non-college educated workers more generally.
For some reason, the NYT and other news outlets never point out that the “free traders” seem to have no problem with protectionist measures that benefit highly-educated professionals. For example, foreign doctors are prohibited from practicing medicine in the United States unless they complete a U.S. residency program. As a result, our doctors are paid twice as much as doctors in other wealthy countries (more than $250,000 a year on average, net of malpractice insurance and other expenses). This costs the country almost $100 billion a year in higher health care costs (@ $700 per family, per year).
We prohibit dentists from practicing in the United States unless they graduate from a U.S. dental school. (Since 2011, graduates of Canadian schools are also allowed to practice here.) These and other protectionist measures inflate the pay of highly educated professionals at great cost to the economy. However, these protectionist barriers never seem to be on the agenda of free traders.
(As many people have pointed out to me, if we simplified the rules so that more foreign professionals could practice in the United States we would get more professionals from developing countries. This could lead to a serious problem of “brain drain” as these countries lose their brightest and most educated people. As I have pointed out many times, we do know how to compensate for this flow of professionals. We could pay the countries from which these people came, so that they would be able to train two or three doctors or other professionals for every one that comes to the U.S. As I have also pointed out, we already get a substantial number of professionals from these countries and provide zero compensation, so it is striking that this concern only arises in the context of a proposal that jeopardizes the pay of high-end professionals.)
It is also important to note that stronger and longer patent and copyright and related protections have been a central part of recent trade deals. These protections are protectionism, the opposite of free trade. They are enormously costly and redistribute income upward. In the case of prescription drugs alone, patent and related protections raise the amount we pay for drugs by around $350 billion annually (@ $2,500 per family, per year) compared with the free market price. Patent monopolies do support research, but there are other more efficient mechanisms for financing research. (Get the full story in my book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. It’s free.)
Anyhow, it is touching to see that elite types are discovering that much of the country is unhappy with policies that were designed to redistribute from them to elite-types. The question we all must ask is, “are our elites learning?”
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Economists have been disappointed by the extraordinarily weak productivity growth of the last decade. Low productivity growth means that there is less room for improvements in living standards and more leisure.
Fortunately there may be an answer. Timothy Lee at Vox tells us that higher minimum wages are leading to more rapid automation. According to his piece, higher wages are pushing McDonald’s around the country to experiment with touchscreen ordering. This will raise productivity at McDonald’s and at other restaurants that adopt the technology.
While Lee for some reason views higher productivity as a bad thing, virtually all economists view productivity growth as the main determinant of living standards in the long-run. While productivity growth can displace workers, we know how to run macroeconomic policies (e.g. keep the Federal Reserve Board from raising interest rates and/or run larger budget deficits) to maintain full employment. So if Lee is right and higher wages are leading to more rapid productivity growth, this is great news.
Economists have been disappointed by the extraordinarily weak productivity growth of the last decade. Low productivity growth means that there is less room for improvements in living standards and more leisure.
Fortunately there may be an answer. Timothy Lee at Vox tells us that higher minimum wages are leading to more rapid automation. According to his piece, higher wages are pushing McDonald’s around the country to experiment with touchscreen ordering. This will raise productivity at McDonald’s and at other restaurants that adopt the technology.
While Lee for some reason views higher productivity as a bad thing, virtually all economists view productivity growth as the main determinant of living standards in the long-run. While productivity growth can displace workers, we know how to run macroeconomic policies (e.g. keep the Federal Reserve Board from raising interest rates and/or run larger budget deficits) to maintain full employment. So if Lee is right and higher wages are leading to more rapid productivity growth, this is great news.
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Traditional taxi companies are required to have their drivers undergo extensive background checks, including finger-print based checks. Apparently, Uber lacks the competence to deal with similar requirements to ensure the safety of their passengers. According to the Washington Post the company is prepared to pull out of the state of Maryland if it requires such checks.
It may well be that the Uber management lacks the competence to deal with the safety requirements that traditional taxi companies have adhered to for decades. If this is the case, then hopefully the top management will be replaced by a more competent group. Perhaps they will spend more of their resources managing the company and less on highly paid lobbyists like former Obama adviser David Plouffe.
Traditional taxi companies are required to have their drivers undergo extensive background checks, including finger-print based checks. Apparently, Uber lacks the competence to deal with similar requirements to ensure the safety of their passengers. According to the Washington Post the company is prepared to pull out of the state of Maryland if it requires such checks.
It may well be that the Uber management lacks the competence to deal with the safety requirements that traditional taxi companies have adhered to for decades. If this is the case, then hopefully the top management will be replaced by a more competent group. Perhaps they will spend more of their resources managing the company and less on highly paid lobbyists like former Obama adviser David Plouffe.
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