It has become a common practice for reporters to refer to former Secretary of State Hillary Clinton’s proposal to spend $275 billion on infrastructure. Is this a lot of money? My guess is that almost no one reading the number has a clue. Certainly Secretary Clinton wants people to think it is a major commitment.
While there is no obvious yes or no answer, it would help first of all if reporters started by giving a time frame. Spending $275 billion over one year is a much larger commitment than $275 billion over 10 years. The proposal would spend this money out over five years, making the annual amount $55 billion a year.
By comparison, the new highway bill calls for spending just over $60 billion annually on infrastructure over the next five years, so Clinton’s proposal would nearly double current spending. As a share of the total budget it is still not a huge deal. With government spending projected to average around $4.7 trillion over the first five years of a Clinton administration, the proposal would amount to a bit less than 1.2 percent of projected spending. Measured as a share of projected GDP, it would be roughly 0.2 percent. And, it would come to roughly $170 a year per person in spending.
There are other ways to measure this sum, including looking at past levels of spending or relative to estimates of the need for new infrastructure. Reporters have much room to pick and choose on this one, but telling us that Clinton wants to spend $275 billion on infrastructure really is not providing information.
It has become a common practice for reporters to refer to former Secretary of State Hillary Clinton’s proposal to spend $275 billion on infrastructure. Is this a lot of money? My guess is that almost no one reading the number has a clue. Certainly Secretary Clinton wants people to think it is a major commitment.
While there is no obvious yes or no answer, it would help first of all if reporters started by giving a time frame. Spending $275 billion over one year is a much larger commitment than $275 billion over 10 years. The proposal would spend this money out over five years, making the annual amount $55 billion a year.
By comparison, the new highway bill calls for spending just over $60 billion annually on infrastructure over the next five years, so Clinton’s proposal would nearly double current spending. As a share of the total budget it is still not a huge deal. With government spending projected to average around $4.7 trillion over the first five years of a Clinton administration, the proposal would amount to a bit less than 1.2 percent of projected spending. Measured as a share of projected GDP, it would be roughly 0.2 percent. And, it would come to roughly $170 a year per person in spending.
There are other ways to measure this sum, including looking at past levels of spending or relative to estimates of the need for new infrastructure. Reporters have much room to pick and choose on this one, but telling us that Clinton wants to spend $275 billion on infrastructure really is not providing information.
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The Washington Post has long expressed outrage over the fact that unionized auto workers can get $28 an hour. Therefore it is hardly surprising to see editorial page writer Charles Lane with a column complaining that “the United Auto Workers sell out nonunion auto workers.”
The piece starts out by acknowledging that the AFL-CIO opposes tax provisions and trade agreements (wrongly called free trade agreements — apparently Lane has not heard about the increases in patent and copyright protection in these pacts) that encourage outsourcing. He could have also noted that it has argued for measures against currency management and promoted labor rights elsewhere, also measures that work against outsourcing. And, it would be appropriate to note in this context its support for measures that help the workforce as a whole, like Social Security, Medicare, unemployment insurance, and the Affordable Care Act.
But in spite of this seeming support for the workforce as a whole, Lane decides he going to prove to his readers that the United Auto Workers supports outsourcing. His smoking gun is the argument that if the union had agreed to lower pay for its workers at the Big Three, then they might shift fewer jobs to Mexico.
Lane’s water pistol here is shooting blanks. As he himself notes in the piece, even the non-union car manufacturers are shifting jobs to Mexico. They have cheaper wages there, companies will therefore try to do this. Essentially, Lane is arguing that unions sellout non-union workers by pushing for higher wages for their workers because if unionized workers got low pay in the United States, there would be less incentive to look overseas for cheap labor. That may be compelling logic at the Washington Post, but probably not anywhere else in the world.
It is worth noting that the Washington Post has never once run either an opinion piece or news article on the protectionist measures that allow U.S. doctors to earn on average twice as much as their counterparts in other wealthy countries. This costs the country nearly $100 billion a year in higher health care costs, or just under $800 a household.
It is probably also worth noting that manufacturing compensation is on average more than 30 percent higher in Germany and several other European countries than in the United States. And unions in general are associated with lower levels of inequality, according to the International Monetary Fund.
But hey, Charles Lane and the Washington Post are outraged that auto workers can earn $28 an hour.
The Washington Post has long expressed outrage over the fact that unionized auto workers can get $28 an hour. Therefore it is hardly surprising to see editorial page writer Charles Lane with a column complaining that “the United Auto Workers sell out nonunion auto workers.”
The piece starts out by acknowledging that the AFL-CIO opposes tax provisions and trade agreements (wrongly called free trade agreements — apparently Lane has not heard about the increases in patent and copyright protection in these pacts) that encourage outsourcing. He could have also noted that it has argued for measures against currency management and promoted labor rights elsewhere, also measures that work against outsourcing. And, it would be appropriate to note in this context its support for measures that help the workforce as a whole, like Social Security, Medicare, unemployment insurance, and the Affordable Care Act.
But in spite of this seeming support for the workforce as a whole, Lane decides he going to prove to his readers that the United Auto Workers supports outsourcing. His smoking gun is the argument that if the union had agreed to lower pay for its workers at the Big Three, then they might shift fewer jobs to Mexico.
Lane’s water pistol here is shooting blanks. As he himself notes in the piece, even the non-union car manufacturers are shifting jobs to Mexico. They have cheaper wages there, companies will therefore try to do this. Essentially, Lane is arguing that unions sellout non-union workers by pushing for higher wages for their workers because if unionized workers got low pay in the United States, there would be less incentive to look overseas for cheap labor. That may be compelling logic at the Washington Post, but probably not anywhere else in the world.
It is worth noting that the Washington Post has never once run either an opinion piece or news article on the protectionist measures that allow U.S. doctors to earn on average twice as much as their counterparts in other wealthy countries. This costs the country nearly $100 billion a year in higher health care costs, or just under $800 a household.
It is probably also worth noting that manufacturing compensation is on average more than 30 percent higher in Germany and several other European countries than in the United States. And unions in general are associated with lower levels of inequality, according to the International Monetary Fund.
But hey, Charles Lane and the Washington Post are outraged that auto workers can earn $28 an hour.
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Eduardo Porter discusses whether a no growth economy is feasible as a solution to addressing global warming. While he is largely right about the practicality of no-growth economy, there are a couple of points worth adding.
As a practical matter, it is just simple arithmetic that a larger world population will require fewer greenhouse gas (GHG) emissions per person. For this reason, a shrinking world population, or least more slowly growing one, would make it easier to hit emissions targets.
The second point is that historically people having taken the dividend of productivity gains in a mix of more lesiure and higher income. Given the strong correlation between income and GHG it would be desirable to structure policy to give people more incentive to take the benefits of productivity growth in leisure.
There has been a huge difference in this area between Europe and the United States over the 35 years. Europeans can almost all count on 4–6 weeks a year of paid vacation, paid family leave and sick days, and often shorter workweeks. As a result, the average work year in Europe has 20 percent fewer hours than in the United States. These countries have much lower levels of GHG per person than the United States. Policies that push the United States in this direction and push Europe further in the direction of more leisure should help to reduce GHG emissions.
As a definitional matter, better software, education, and health care would all be forms of economic growth. It is difficult to see why anyone would be opposed to such gains.
Eduardo Porter discusses whether a no growth economy is feasible as a solution to addressing global warming. While he is largely right about the practicality of no-growth economy, there are a couple of points worth adding.
As a practical matter, it is just simple arithmetic that a larger world population will require fewer greenhouse gas (GHG) emissions per person. For this reason, a shrinking world population, or least more slowly growing one, would make it easier to hit emissions targets.
The second point is that historically people having taken the dividend of productivity gains in a mix of more lesiure and higher income. Given the strong correlation between income and GHG it would be desirable to structure policy to give people more incentive to take the benefits of productivity growth in leisure.
There has been a huge difference in this area between Europe and the United States over the 35 years. Europeans can almost all count on 4–6 weeks a year of paid vacation, paid family leave and sick days, and often shorter workweeks. As a result, the average work year in Europe has 20 percent fewer hours than in the United States. These countries have much lower levels of GHG per person than the United States. Policies that push the United States in this direction and push Europe further in the direction of more leisure should help to reduce GHG emissions.
As a definitional matter, better software, education, and health care would all be forms of economic growth. It is difficult to see why anyone would be opposed to such gains.
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Most economists argue that the Fed’s quantitative easing policy, in which it bought up more than $3 trillion in government bonds and mortgage backed securities, is still helping to keep interest rates down even though the Fed has stopped buying these assets. The argument is that by holding a large stock of bonds the Fed is keeping their price higher than would otherwise be the case. And higher bond price mean lower interest rates.
While economists generally accept this view that the holding of a large stock of assets matters with U.S. interest rates, rather than just the flow of purchases, they don’t seem to apply the same logic to currency prices. This NYT article on the Chinese Renminbi becoming an international currency never mentions the fact that China’s central bank still holds more than $3 trillion in foreign exchange in discussing whether the renminbi is a freely floating currency.
If we believe that economics works the same way with currency values as with interest rates, then we have to believe that the decision by the Chinese central bank to continue to hold large amounts of dollars and other foreign currencies is raising their value relative to the renminbi compared to a situation where the bank held a more normal amount of reserves. This matters, since the implication is that the renminbi is still well below the level it would be at if the exchange rate was set without central bank interventions.
Most economists argue that the Fed’s quantitative easing policy, in which it bought up more than $3 trillion in government bonds and mortgage backed securities, is still helping to keep interest rates down even though the Fed has stopped buying these assets. The argument is that by holding a large stock of bonds the Fed is keeping their price higher than would otherwise be the case. And higher bond price mean lower interest rates.
While economists generally accept this view that the holding of a large stock of assets matters with U.S. interest rates, rather than just the flow of purchases, they don’t seem to apply the same logic to currency prices. This NYT article on the Chinese Renminbi becoming an international currency never mentions the fact that China’s central bank still holds more than $3 trillion in foreign exchange in discussing whether the renminbi is a freely floating currency.
If we believe that economics works the same way with currency values as with interest rates, then we have to believe that the decision by the Chinese central bank to continue to hold large amounts of dollars and other foreign currencies is raising their value relative to the renminbi compared to a situation where the bank held a more normal amount of reserves. This matters, since the implication is that the renminbi is still well below the level it would be at if the exchange rate was set without central bank interventions.
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The Washington Post, which has in the past expressed outrage over items like auto workers getting paid $28 an hour and people receiving disability benefits, is again pursuing its drive for higher unemployment. The context is an editorial denouncing former Secretary of State Hillary Clinton’s “pander” to middle class voters.
The specific issue is Clinton’s promise to increase government spending in various areas while ruling out a tax increase on families earning less than $250,000 a year. The Post tells readers that this promise will be impossible to keep:
“To the contrary, if the U.S. government is to do all those things and still reduce its long-term debt to a more manageable share of the total economy, middle- and upper-middle-class Americans are going to have to contribute more, not less.”
While the Post does have a good point on a pledge that sets promises to protect people earning more than 97 percent of the public from any tax increases (the $250,000 threshold), the idea that the current level of the debt is unmanageable has as much basis in reality as creationism. The interest rate on 10-year U.S. Treasury bonds is just 2.2 percent. This is three full percentage points below the rates we saw in the late 1990s when the government was running budget surpluses. The current interest burden of the debt, net of payments from the Federal Reserve Board, is well under 1.0 percent of GDP. This compares to a burden of more than 3.0 percent of GDP in the early 1990s.
In other words, the Post has zero, nothing, nada, to support its contention that the current level of the debt is somehow unmanageable. This claim deserves to be derided for the sort of flat earth economics it is.
And, it needs to be pointed out that cutting the budget (or raising taxes) in a context where the economy is below full employment means reducing demand. This means reducing employment and increasing unemployment, especially in a context where there is no plausible story that interest rates will decline enough to induce an offsetting increase in demand.
So once again we see the Post pushing a policy with the predictable effect of hurting workers. It wants lower deficits and debt which will mean higher unemployment and lower wages. And, it is upset that Hillary Clinton doesn’t seem to share its agenda.
The Washington Post, which has in the past expressed outrage over items like auto workers getting paid $28 an hour and people receiving disability benefits, is again pursuing its drive for higher unemployment. The context is an editorial denouncing former Secretary of State Hillary Clinton’s “pander” to middle class voters.
The specific issue is Clinton’s promise to increase government spending in various areas while ruling out a tax increase on families earning less than $250,000 a year. The Post tells readers that this promise will be impossible to keep:
“To the contrary, if the U.S. government is to do all those things and still reduce its long-term debt to a more manageable share of the total economy, middle- and upper-middle-class Americans are going to have to contribute more, not less.”
While the Post does have a good point on a pledge that sets promises to protect people earning more than 97 percent of the public from any tax increases (the $250,000 threshold), the idea that the current level of the debt is unmanageable has as much basis in reality as creationism. The interest rate on 10-year U.S. Treasury bonds is just 2.2 percent. This is three full percentage points below the rates we saw in the late 1990s when the government was running budget surpluses. The current interest burden of the debt, net of payments from the Federal Reserve Board, is well under 1.0 percent of GDP. This compares to a burden of more than 3.0 percent of GDP in the early 1990s.
In other words, the Post has zero, nothing, nada, to support its contention that the current level of the debt is somehow unmanageable. This claim deserves to be derided for the sort of flat earth economics it is.
And, it needs to be pointed out that cutting the budget (or raising taxes) in a context where the economy is below full employment means reducing demand. This means reducing employment and increasing unemployment, especially in a context where there is no plausible story that interest rates will decline enough to induce an offsetting increase in demand.
So once again we see the Post pushing a policy with the predictable effect of hurting workers. It wants lower deficits and debt which will mean higher unemployment and lower wages. And, it is upset that Hillary Clinton doesn’t seem to share its agenda.
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Steven Pearlstein has some useful ideas for limiting the rise in college costs, but he leaves an obvious item off the list. How about a hard cap on the pay of university presidents and other high level university employees?
The president of the United States gets $400,000 a year. That seems like a reasonable target. (This would be a hard cap, including all bonuses, deferred comp, etc. There is no reason to waste time with a cap that can be easily evaded.)
This would not be an interference with the market determination of pay. The deal would be that this cap would apply at public colleges and universities and also private schools that get tax-exempt status. If a school doesn’t want to get money from the government, either in direct payments or tax subsidies, it would be free to pay its top management whatever it wanted.
Of course schools would scream bloody murder since many now give their presidents compensation packages that are three or four times this amount. But, life is tough. Just as U.S. manufacturing workers have had to adjust to a world where they compete with workers in the developing world earning $1 an hour, or less, university presidents may have to adjust to a world in which taxpayers will not subsidize their pay without limit.
While some of the current crop of presidents may take their deferred compensation and walk, there are many talented and hardworking people who would gladly take a job that pays ten times what the median worker makes in a year. Besides, since we keep hearing cries from the Washington Post crowd about the need to tighten our belts, what could be a better place to start?
Steven Pearlstein has some useful ideas for limiting the rise in college costs, but he leaves an obvious item off the list. How about a hard cap on the pay of university presidents and other high level university employees?
The president of the United States gets $400,000 a year. That seems like a reasonable target. (This would be a hard cap, including all bonuses, deferred comp, etc. There is no reason to waste time with a cap that can be easily evaded.)
This would not be an interference with the market determination of pay. The deal would be that this cap would apply at public colleges and universities and also private schools that get tax-exempt status. If a school doesn’t want to get money from the government, either in direct payments or tax subsidies, it would be free to pay its top management whatever it wanted.
Of course schools would scream bloody murder since many now give their presidents compensation packages that are three or four times this amount. But, life is tough. Just as U.S. manufacturing workers have had to adjust to a world where they compete with workers in the developing world earning $1 an hour, or less, university presidents may have to adjust to a world in which taxpayers will not subsidize their pay without limit.
While some of the current crop of presidents may take their deferred compensation and walk, there are many talented and hardworking people who would gladly take a job that pays ten times what the median worker makes in a year. Besides, since we keep hearing cries from the Washington Post crowd about the need to tighten our belts, what could be a better place to start?
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The Washington Post had an article on a new report from the Government Accountability Office which noted that most clinical trials don’t report differences in outcome by gender. This could be another advantage of publicly funded clinical trials. The government could make a condition of financing that all the baseline characteristics of the participants in trials (e.g. gender, age, weight, etc.) be publicly disclosed along with the outcomes. This would allow other researchers and doctors to better determine which drugs might be best for their patients.
Of course, the other major advantage of having the government pay for the trials (after buying up all rights to the drugs) is that successful drugs would be immediately available at generic prices. It would not be necessary for hand wringing over paying tens or hundreds of thousands of dollars for drugs like Sovaldi or the new generation of cancer drugs coming on the market. It also wouldn’t then be necessary for the Obama administration to send its trade negotiators overseas to beat up our trading partners demanding stronger and longer patent and related protections for prescription drugs.
The Washington Post had an article on a new report from the Government Accountability Office which noted that most clinical trials don’t report differences in outcome by gender. This could be another advantage of publicly funded clinical trials. The government could make a condition of financing that all the baseline characteristics of the participants in trials (e.g. gender, age, weight, etc.) be publicly disclosed along with the outcomes. This would allow other researchers and doctors to better determine which drugs might be best for their patients.
Of course, the other major advantage of having the government pay for the trials (after buying up all rights to the drugs) is that successful drugs would be immediately available at generic prices. It would not be necessary for hand wringing over paying tens or hundreds of thousands of dollars for drugs like Sovaldi or the new generation of cancer drugs coming on the market. It also wouldn’t then be necessary for the Obama administration to send its trade negotiators overseas to beat up our trading partners demanding stronger and longer patent and related protections for prescription drugs.
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