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The NYT gave an analysis of changing attitudes towards trade agreements that completely misrepresented the key issues at stake. The headline pretty much said it all, “both parties used to back free trade. Now they bash it.”
In fact, the current round of deals being negotiated, most importantly the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Pact (TTIP) have little to do with a conventional free trade agenda of lowering tariff barriers and eliminating quotas. With few exceptions, these barriers are already low or have been eliminated altogether.
Rather these deals are about putting in place a regulatory agenda that is being designed to foster corporate interests. The deals provide a backdoor around the normal legislative process, since many of these measures would not receive the support of democratically elected officials.
The agreements are also protectionist in important ways, making patent and copyright protections stronger and longer. (It doesn’t matter if you like these government granted monopolies, they are still protectionist.)
These deals are being largely negotiated in secrecy, with most of the input coming from top corporate executives. Then they are pushed on to the American public as all or nothing propositions, with the proponents arguing not only the economic merits, but rather claiming they are a geo-political necessity.
In the case of the TPP, the Obama administration is now contending that the defeat of the agreement would be devastating to efforts to maintain an alliance of countries to contain China. If this is in fact true, then it is understandable that the public would be outraged over the administration’s decision to let corporate interests get all sorts of special favors included in a deal that the administration now says is essential for national security.
It is incredible that the NYT tried to present the current debate as a narrow one over traditional issues of trade and protection. This is obviously not the case and there are no shortage of experts who could have explained this fact to its reporter. A good place to start would be the Nobel Prize-winning economist Paul Krugman, who also happens to be a NYT columnist. Joe Stiglitz, another Nobel Prize-winning economist, could have also explained the nature of these trade agreements to its reporter.
It would be great if the paper tried to do serious reporting on trade rather than just repeating long outdated nonsense about free traders vs. protectionists.
The NYT gave an analysis of changing attitudes towards trade agreements that completely misrepresented the key issues at stake. The headline pretty much said it all, “both parties used to back free trade. Now they bash it.”
In fact, the current round of deals being negotiated, most importantly the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Pact (TTIP) have little to do with a conventional free trade agenda of lowering tariff barriers and eliminating quotas. With few exceptions, these barriers are already low or have been eliminated altogether.
Rather these deals are about putting in place a regulatory agenda that is being designed to foster corporate interests. The deals provide a backdoor around the normal legislative process, since many of these measures would not receive the support of democratically elected officials.
The agreements are also protectionist in important ways, making patent and copyright protections stronger and longer. (It doesn’t matter if you like these government granted monopolies, they are still protectionist.)
These deals are being largely negotiated in secrecy, with most of the input coming from top corporate executives. Then they are pushed on to the American public as all or nothing propositions, with the proponents arguing not only the economic merits, but rather claiming they are a geo-political necessity.
In the case of the TPP, the Obama administration is now contending that the defeat of the agreement would be devastating to efforts to maintain an alliance of countries to contain China. If this is in fact true, then it is understandable that the public would be outraged over the administration’s decision to let corporate interests get all sorts of special favors included in a deal that the administration now says is essential for national security.
It is incredible that the NYT tried to present the current debate as a narrow one over traditional issues of trade and protection. This is obviously not the case and there are no shortage of experts who could have explained this fact to its reporter. A good place to start would be the Nobel Prize-winning economist Paul Krugman, who also happens to be a NYT columnist. Joe Stiglitz, another Nobel Prize-winning economist, could have also explained the nature of these trade agreements to its reporter.
It would be great if the paper tried to do serious reporting on trade rather than just repeating long outdated nonsense about free traders vs. protectionists.
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Max Ehrenfreund had an interesting piece reporting on a new analysis of the first round of wage increases from Seattle’s $15 an hour minimum wage law. The higher wage is being phased in between 2015 and 2020. The study found modest average wage gains of 73 cents an hour for low wage workers. The effect was limited in part because the strong economy helped to boost wages, so the minimum wage had less effect than otherwise might have been expected.
But the piece also notes the finding that average work time fell by roughly 15 minutes per week and employment by 1.2 percent. It is important to recognize that this drop in employment does not mean that 1.2 percent low wage workers will have jobs over the course of the year.
These are high turnover jobs. The 1.2 percent drop in employment means that at a point in time, 1.2 percent fewer workers will be employed. What this means for low-wage workers in Seattle is that they can expect to spend more time looking for a new job when they lose or quit their prior job. If they get roughly 7.0 percent more for the hours that they work, but they put in 1–2 percent fewer hours over the course of the year, then they will likely consider themselves better off.
In other words, the finding of some reduction in employment is not necessarily a bad thing. It doesn’t mean that 1.2 percent of Seattle low-wage workforce has been condemned to go the whole year without a job.
Max Ehrenfreund had an interesting piece reporting on a new analysis of the first round of wage increases from Seattle’s $15 an hour minimum wage law. The higher wage is being phased in between 2015 and 2020. The study found modest average wage gains of 73 cents an hour for low wage workers. The effect was limited in part because the strong economy helped to boost wages, so the minimum wage had less effect than otherwise might have been expected.
But the piece also notes the finding that average work time fell by roughly 15 minutes per week and employment by 1.2 percent. It is important to recognize that this drop in employment does not mean that 1.2 percent low wage workers will have jobs over the course of the year.
These are high turnover jobs. The 1.2 percent drop in employment means that at a point in time, 1.2 percent fewer workers will be employed. What this means for low-wage workers in Seattle is that they can expect to spend more time looking for a new job when they lose or quit their prior job. If they get roughly 7.0 percent more for the hours that they work, but they put in 1–2 percent fewer hours over the course of the year, then they will likely consider themselves better off.
In other words, the finding of some reduction in employment is not necessarily a bad thing. It doesn’t mean that 1.2 percent of Seattle low-wage workforce has been condemned to go the whole year without a job.
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Okay, it’s not like the good old days of 2002–2007, but there are some grounds for concern in certain markets. In particular, the Case-Shiller tiered price indexes are showing extraordinary increases in the bottom tier (lowest third of house sale prices) in several markets.
For example, the index shows that in Denver prices in the bottom tier have risen by 16.7 percent over the last year and by 49.8 percent over the last three years. The comparable figures for the top tier are 6.4 percent and 21.4 percent. The CPI owner equivalent rent (OER) index has risen by 19.6 percent over the last three years.
In Portland, the one years increase for the bottom tier has been 16.2 percent and the three year 44.4 percent. For the top tier, the increases have been 9.9 percent and 26.3 percent. Rents have risen 16.3 percent over the last three years. In Los Angeles, prices in the bottom teir have risen 8.9 percent in the last year and 37.8 percent over the last three years. That compares to 7.0 percent and 21.1 percent for the top tier. Rents have risen by 9.9 percent over the last three years.
In Chicago, prices in the bottom tier have risen by 40.7 percent over the last three years and in Miami by 55.6 percent. Rents over this period rose in the two cities by 6.9 percent and 10.4 percent, respectively.
These numbers should provide serious grounds for caution. This is not a story of a bubble whose collapse will sink the economy and cause a financial crisis, but there is a real possibility that a lot of moderate-income homebuyers may get badly burned if prices turn around. The real estate pushers never care, since they make their money on the turnover, but it won’t be a pretty picture for the families affected.
Okay, it’s not like the good old days of 2002–2007, but there are some grounds for concern in certain markets. In particular, the Case-Shiller tiered price indexes are showing extraordinary increases in the bottom tier (lowest third of house sale prices) in several markets.
For example, the index shows that in Denver prices in the bottom tier have risen by 16.7 percent over the last year and by 49.8 percent over the last three years. The comparable figures for the top tier are 6.4 percent and 21.4 percent. The CPI owner equivalent rent (OER) index has risen by 19.6 percent over the last three years.
In Portland, the one years increase for the bottom tier has been 16.2 percent and the three year 44.4 percent. For the top tier, the increases have been 9.9 percent and 26.3 percent. Rents have risen 16.3 percent over the last three years. In Los Angeles, prices in the bottom teir have risen 8.9 percent in the last year and 37.8 percent over the last three years. That compares to 7.0 percent and 21.1 percent for the top tier. Rents have risen by 9.9 percent over the last three years.
In Chicago, prices in the bottom tier have risen by 40.7 percent over the last three years and in Miami by 55.6 percent. Rents over this period rose in the two cities by 6.9 percent and 10.4 percent, respectively.
These numbers should provide serious grounds for caution. This is not a story of a bubble whose collapse will sink the economy and cause a financial crisis, but there is a real possibility that a lot of moderate-income homebuyers may get badly burned if prices turn around. The real estate pushers never care, since they make their money on the turnover, but it won’t be a pretty picture for the families affected.
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That’s the question millions are asking after reading his column noting that both the Democratic and Republican platforms call for re-instating Glass-Steagall. (It is important to note that the Democrats refer to the 21st Century Glass-Steagall Act introduced by Senator Elizabeth Warren. This measure would also address some of the problems created by the shadow banking system by changing rules on repayment in bankruptcy. This would put a check on the ability of troubled institutions to have access to credit markets.) Sorkin indicates that he doesn’t approve of Glass-Steagall.
At one point he tells readers:
“Whether reinstating the law is good idea or not, the short-term implications are decidedly negative: It would most likely mean a loss of jobs as part of a slowdown in lending from the biggest banks.
“There is a reasonable argument to make that it would also put the United States banking industry at a competitive disadvantage relative to international peers, some of which face fewer restrictions.”
It would be interesting to know how Sorkin decided that reinstating Glass-Steagall would reduce lending in the economy or even big bank lending. (It is possible that a reduction in big bank lending would be offset by more lending by smaller banks.) The big banks were supposed to keep a strict separation between their investment bank divisions and their commercial bank operations, so it’s not obvious why a separation would reduce lending if they had been following the law.
It is also worth noting, that according to standard trade theory, if our surplus on banking services is reduced by a new Glass-Steagall, our trade deficit in other areas, like manufacturing, would decline. Many people might consider this a desirable outcome. Of course, this assumes that people follow the trade theory that ostensibly underlies NAFTA, the TPP, and other recent trade deals.
It is worth noting that Sorkin is right that Glass-Steagall would not have prevented the economic crisis in 2008. The problem was allowing a massive housing bubble to grow unchecked. When house prices collapsed the mortgages, and other assets that depended on house prices, plunged in value. The repeal of Glass-Steagall did not in any obvious way contribute to the bubble.
That’s the question millions are asking after reading his column noting that both the Democratic and Republican platforms call for re-instating Glass-Steagall. (It is important to note that the Democrats refer to the 21st Century Glass-Steagall Act introduced by Senator Elizabeth Warren. This measure would also address some of the problems created by the shadow banking system by changing rules on repayment in bankruptcy. This would put a check on the ability of troubled institutions to have access to credit markets.) Sorkin indicates that he doesn’t approve of Glass-Steagall.
At one point he tells readers:
“Whether reinstating the law is good idea or not, the short-term implications are decidedly negative: It would most likely mean a loss of jobs as part of a slowdown in lending from the biggest banks.
“There is a reasonable argument to make that it would also put the United States banking industry at a competitive disadvantage relative to international peers, some of which face fewer restrictions.”
It would be interesting to know how Sorkin decided that reinstating Glass-Steagall would reduce lending in the economy or even big bank lending. (It is possible that a reduction in big bank lending would be offset by more lending by smaller banks.) The big banks were supposed to keep a strict separation between their investment bank divisions and their commercial bank operations, so it’s not obvious why a separation would reduce lending if they had been following the law.
It is also worth noting, that according to standard trade theory, if our surplus on banking services is reduced by a new Glass-Steagall, our trade deficit in other areas, like manufacturing, would decline. Many people might consider this a desirable outcome. Of course, this assumes that people follow the trade theory that ostensibly underlies NAFTA, the TPP, and other recent trade deals.
It is worth noting that Sorkin is right that Glass-Steagall would not have prevented the economic crisis in 2008. The problem was allowing a massive housing bubble to grow unchecked. When house prices collapsed the mortgages, and other assets that depended on house prices, plunged in value. The repeal of Glass-Steagall did not in any obvious way contribute to the bubble.
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Samuelson told readers that we “can’t borrow ourselves to prosperity.” We can only assume that this is something that his parents told him because it surely has no basis in evidence. If the argument is that excessive borrowing has somehow caused us problems then Samuelson would have some serious work to make that case. The interest rate on 10-year Treasury bonds is 1.6 percent. The inflation rate remains well under the Fed’s 2.0 percent target.
It’s hard to imagine what on earth Samuelson can be thinking of, these are the pieces of evidence that economists would look to as harm from excessive borrowing. Of course, in the Washington Post they don’t give a damn about evidence if the point of the argument is to keep ordinary workers from having jobs and keeping wages down. For this reason, Samuelson will probably be able to get a paycheck for as long as he likes for repeating things that his parents told him.
Samuelson also suffers from a serious lack of historical knowledge. He claims:
“Americans are now said to be “angry” and to demand “change.” This is misleading. In the past two decades, Americans have had more change than they’ve wanted. What they’d really like is to repeal the changes — the economic uncertainties, the physical threats, the geopolitical challenges — and revert to the romanticized world of the late 1990s, when the outlook seemed more tranquil.”
Actually, what is more likely than romanticizing the 1990s is that people think that they should be able to share in the gains of productivity growth rather than living in an economy which is rigged to give all the money to Wall Street types, CEOs, and other elite characters. The normal state of affairs until this rigging was that wages rose roughly in step with productivity. However since 2000, real wages have barely risen for the vast majority of the population. A columnist with a bit more historical knowledge would know that it is highly unusual for wages to stagnate for long periods of time and all income gains to go to those at the top.
Samuelson told readers that we “can’t borrow ourselves to prosperity.” We can only assume that this is something that his parents told him because it surely has no basis in evidence. If the argument is that excessive borrowing has somehow caused us problems then Samuelson would have some serious work to make that case. The interest rate on 10-year Treasury bonds is 1.6 percent. The inflation rate remains well under the Fed’s 2.0 percent target.
It’s hard to imagine what on earth Samuelson can be thinking of, these are the pieces of evidence that economists would look to as harm from excessive borrowing. Of course, in the Washington Post they don’t give a damn about evidence if the point of the argument is to keep ordinary workers from having jobs and keeping wages down. For this reason, Samuelson will probably be able to get a paycheck for as long as he likes for repeating things that his parents told him.
Samuelson also suffers from a serious lack of historical knowledge. He claims:
“Americans are now said to be “angry” and to demand “change.” This is misleading. In the past two decades, Americans have had more change than they’ve wanted. What they’d really like is to repeal the changes — the economic uncertainties, the physical threats, the geopolitical challenges — and revert to the romanticized world of the late 1990s, when the outlook seemed more tranquil.”
Actually, what is more likely than romanticizing the 1990s is that people think that they should be able to share in the gains of productivity growth rather than living in an economy which is rigged to give all the money to Wall Street types, CEOs, and other elite characters. The normal state of affairs until this rigging was that wages rose roughly in step with productivity. However since 2000, real wages have barely risen for the vast majority of the population. A columnist with a bit more historical knowledge would know that it is highly unusual for wages to stagnate for long periods of time and all income gains to go to those at the top.
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The NYT had an article on the research lab that uncovered Volkswagen’s cheating on its emissions. Apparently, the lab was run on a grant of $70,000. That would be less than 0.5 percent of your typical CEO’s pay. In fact, it would be less than 10 percent of the pay of the top executives at major foundations that are supposed to care about doing good in the world.
The story is hardly a surprise to anyone who knows the world of research, but still striking.
The NYT had an article on the research lab that uncovered Volkswagen’s cheating on its emissions. Apparently, the lab was run on a grant of $70,000. That would be less than 0.5 percent of your typical CEO’s pay. In fact, it would be less than 10 percent of the pay of the top executives at major foundations that are supposed to care about doing good in the world.
The story is hardly a surprise to anyone who knows the world of research, but still striking.
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Ross Douthat inadvertently told readers much about why large segments of the public in the U.S., U.K., and Western Europe are rejecting the policies pushed by elites. In his NYT column, he complained about Donald Trump’s acceptance speech (which provided much ground for complaint):
“That message was a long attack, not on liberalism per se, but on the bipartisan post-Cold War elite consensus on foreign policy, mass immigration, free trade. It was an attack on George W. Bush’s Iraq war and Hillary Clinton’s Libya incursion both, on Nafta and every trade deal negotiated since, on the perpetual Beltway push for increased immigration, on the entire elite vision of an increasingly borderless globe.”
Actually the United States does not push “free trade.” A major thrust of all trade agreements of the last quarter century has been longer and stronger patent protections. These are “protections” as in not free trade. They raise the price of the affected goods by factors of ten or a hundred, making them equivalent to tariffs of several hundred or several thousand percent.
While the ostensible purpose of thesse protections is to promote innovation and creative work, there is little evidence that the additional incentive provided is justified by the additional cost. The one thing that we know for certain is that they redistribute income upward, forcing ordinary people to pay more for everything from prescription drugs to movies and computer software. The beneficiaries are the high end employees and shareholders of drug companies, software companies and the entertainment industry.
It is also not true that our elites have a vision of a “borderless globe.” In the United States it is illegal to practice medicine unless you complete a residency program in the United States. This means that our elites will have foreign doctors arrested for doing their work. This protectionism raises the pay of U.S. doctors by more than $100,000 a year compared to their counterparts in other wealthy countries. It costs the country around $100 billion a year (@ $700 per family) in higher health care costs.
It is striking that Douthat apparently can not even see these and other protections that redistribute income upward. Perhaps this explains why many people don’t like the elites.
Ross Douthat inadvertently told readers much about why large segments of the public in the U.S., U.K., and Western Europe are rejecting the policies pushed by elites. In his NYT column, he complained about Donald Trump’s acceptance speech (which provided much ground for complaint):
“That message was a long attack, not on liberalism per se, but on the bipartisan post-Cold War elite consensus on foreign policy, mass immigration, free trade. It was an attack on George W. Bush’s Iraq war and Hillary Clinton’s Libya incursion both, on Nafta and every trade deal negotiated since, on the perpetual Beltway push for increased immigration, on the entire elite vision of an increasingly borderless globe.”
Actually the United States does not push “free trade.” A major thrust of all trade agreements of the last quarter century has been longer and stronger patent protections. These are “protections” as in not free trade. They raise the price of the affected goods by factors of ten or a hundred, making them equivalent to tariffs of several hundred or several thousand percent.
While the ostensible purpose of thesse protections is to promote innovation and creative work, there is little evidence that the additional incentive provided is justified by the additional cost. The one thing that we know for certain is that they redistribute income upward, forcing ordinary people to pay more for everything from prescription drugs to movies and computer software. The beneficiaries are the high end employees and shareholders of drug companies, software companies and the entertainment industry.
It is also not true that our elites have a vision of a “borderless globe.” In the United States it is illegal to practice medicine unless you complete a residency program in the United States. This means that our elites will have foreign doctors arrested for doing their work. This protectionism raises the pay of U.S. doctors by more than $100,000 a year compared to their counterparts in other wealthy countries. It costs the country around $100 billion a year (@ $700 per family) in higher health care costs.
It is striking that Douthat apparently can not even see these and other protections that redistribute income upward. Perhaps this explains why many people don’t like the elites.
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The NYT, like much of the rest of the media, feel the need to argue that our trade policies could not possibly be hurting manufacturing workers. Its latest effort in this direction was a piece arguing that China could not possibly be “stealing” U.S. jobs because it is losing jobs itself to other countries.
The basic story is that China has seen a sharp rise in its wages (29 percent over the last three years, according to the article) so it is no longer the low cost producer for many items. The article points out that wages are now far lower in countries like India, Vietnam, and Bangladesh, and that many firms now operating in China are moving production to these countries. Some companies are even looking to reshore operations to the United States.
While the NYT obviously does not like Donald Trump, this argument is just silly on its face. Suppose the United States had a 20 percent tariff on imported textiles that was angering our trading partners. The NYT would then go to factories in North Carolina and elsewhere that were laying off workers, and then ridicule people who said that the tariffs were reducing textile imports.
That would obviously be absurd, but that is the logic of the NYT piece. The issue at hand is whether China’s policy of deliberately keeping down its currency against the dollar has increased its trade surplus with the United States and thereby cost the U.S. manufacturing jobs. The fact that China itself might now be losing jobs, does not in any way disprove the argument that its currency policy did and still does cost the U.S. jobs.
The NYT, like much of the rest of the media, pursues a policy of selective protectionism. It either ignores or supports protectionist measures that tend to benefit higher income people. For some reason, it never discusses the laws that require doctors to complete a residency program in the United States to practice in the United States, as though there were no other way for a person to be a competent doctor. Our protectionist measures for doctors costs the country roughly $100 billion a year in higher health care costs (@ $700 per year per household). There are comparable measures in place for other highly paid professions.
The U.S. also demand stronger and longer copyright patent protection as part of its trade agreements. Protectionism in prescription drugs alone costs the public more than $300 billion a year (@ $2,500 per family). For some reason the NYT doesn’t take note of this protectionism either.
It is only measures that would benefit less-educated workers that earn the wrath of the NYT and the rest of the media. Ironically, pushing a policy that would prevent currency management of the type pursued by China is actually a free trade policy. But the NYT apparently cares much more about who benefits from a policy that the logic behind it.
The NYT, like much of the rest of the media, feel the need to argue that our trade policies could not possibly be hurting manufacturing workers. Its latest effort in this direction was a piece arguing that China could not possibly be “stealing” U.S. jobs because it is losing jobs itself to other countries.
The basic story is that China has seen a sharp rise in its wages (29 percent over the last three years, according to the article) so it is no longer the low cost producer for many items. The article points out that wages are now far lower in countries like India, Vietnam, and Bangladesh, and that many firms now operating in China are moving production to these countries. Some companies are even looking to reshore operations to the United States.
While the NYT obviously does not like Donald Trump, this argument is just silly on its face. Suppose the United States had a 20 percent tariff on imported textiles that was angering our trading partners. The NYT would then go to factories in North Carolina and elsewhere that were laying off workers, and then ridicule people who said that the tariffs were reducing textile imports.
That would obviously be absurd, but that is the logic of the NYT piece. The issue at hand is whether China’s policy of deliberately keeping down its currency against the dollar has increased its trade surplus with the United States and thereby cost the U.S. manufacturing jobs. The fact that China itself might now be losing jobs, does not in any way disprove the argument that its currency policy did and still does cost the U.S. jobs.
The NYT, like much of the rest of the media, pursues a policy of selective protectionism. It either ignores or supports protectionist measures that tend to benefit higher income people. For some reason, it never discusses the laws that require doctors to complete a residency program in the United States to practice in the United States, as though there were no other way for a person to be a competent doctor. Our protectionist measures for doctors costs the country roughly $100 billion a year in higher health care costs (@ $700 per year per household). There are comparable measures in place for other highly paid professions.
The U.S. also demand stronger and longer copyright patent protection as part of its trade agreements. Protectionism in prescription drugs alone costs the public more than $300 billion a year (@ $2,500 per family). For some reason the NYT doesn’t take note of this protectionism either.
It is only measures that would benefit less-educated workers that earn the wrath of the NYT and the rest of the media. Ironically, pushing a policy that would prevent currency management of the type pursued by China is actually a free trade policy. But the NYT apparently cares much more about who benefits from a policy that the logic behind it.
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