Okay, I’m sure it was just an error in editing, but come on. An NYT article on Germany on the 25th anniversary of the unification told readers:
“A new government report showed that gross domestic product per capita in eastern Germany has more than doubled in the past 25 years, but is still one-third the level in the western part of the country.”
I’m sure this is supposed to read that per capita GDP in former East Germany is one-third less than in the western part of country. Even this figure is somewhat misleading since the population of former East Germany is much older and more likely to be retirees than the rest of the country. There is probably still a difference in living standards among the working age populations, but nothing like what would be implied by this sentence.
As BTP readers know, I have my share of typos, but NYT has a bit more resources than my blog.
Note: It appears that even the one-third less number is an exaggeration as Robert Salzberg’s points out in his comment below.
Okay, I’m sure it was just an error in editing, but come on. An NYT article on Germany on the 25th anniversary of the unification told readers:
“A new government report showed that gross domestic product per capita in eastern Germany has more than doubled in the past 25 years, but is still one-third the level in the western part of the country.”
I’m sure this is supposed to read that per capita GDP in former East Germany is one-third less than in the western part of country. Even this figure is somewhat misleading since the population of former East Germany is much older and more likely to be retirees than the rest of the country. There is probably still a difference in living standards among the working age populations, but nothing like what would be implied by this sentence.
As BTP readers know, I have my share of typos, but NYT has a bit more resources than my blog.
Note: It appears that even the one-third less number is an exaggeration as Robert Salzberg’s points out in his comment below.
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Elites like the Trans-Pacific Partnership (TPP). After all, it was designed to redistribute more income to sectors like the pharmaceutical industry, the financial industry, and the entertainment industry. The point is to use an international agreement to over-ride national and subnational governments that might pass laws to protect workers, consumers, or the environment.
In keeping with this spirit, the NYT touted the virtues of the TPP in an article describing President Obama’s efforts to conclude negotiations and get the deal through Congress:
“For President Obama, who cited the potential agreement during his address this week to the United Nations, success in a negotiating effort as old as his administration would be a legacy achievement. The proposed Trans-Pacific Partnership would liberalize trade and open markets among a dozen nations on both sides of the Pacific, from Canada to Chile and Japan to Australia, that account for about two-fifths of the world’s economic output.”
This paragraph tells readers that the NYT really really likes the TPP. After all, legacy achievement is pretty damn good. Does it beat out the Affordable Care Act, the Dodd-Frank financial reform, the stimulus that helped pull the economy out of the trough of the recession?
Apart from this editorializing, the rest of the paragraph is not true. While the countries in the TPP do account for two-fifths of the world’s economy, it is not clear that it would “liberalize trade” between most of the countries. The United States already has trade agreements with most of the other countries in the TPP, including Mexico, Canada, and Australia. In these cases, most of the barriers to trade have already been eliminated. Even the barriers with other countries are already low in most cases. This means that the TPP will do little to lower trade barriers.
On the other hand, a quite explicit purpose of the deal, as noted in this article, is to increase protectionism in the form of longer and stronger patent and copyright protection. Perhaps the NYT likes these forms of protectionism, but they are still protectionism. This means that it is wrong to say that the TPP will liberalize trade. It is entirely possible that the net effect of the deal will be to increase the size of the trade barriers between the countries in the pact.
Elites like the Trans-Pacific Partnership (TPP). After all, it was designed to redistribute more income to sectors like the pharmaceutical industry, the financial industry, and the entertainment industry. The point is to use an international agreement to over-ride national and subnational governments that might pass laws to protect workers, consumers, or the environment.
In keeping with this spirit, the NYT touted the virtues of the TPP in an article describing President Obama’s efforts to conclude negotiations and get the deal through Congress:
“For President Obama, who cited the potential agreement during his address this week to the United Nations, success in a negotiating effort as old as his administration would be a legacy achievement. The proposed Trans-Pacific Partnership would liberalize trade and open markets among a dozen nations on both sides of the Pacific, from Canada to Chile and Japan to Australia, that account for about two-fifths of the world’s economic output.”
This paragraph tells readers that the NYT really really likes the TPP. After all, legacy achievement is pretty damn good. Does it beat out the Affordable Care Act, the Dodd-Frank financial reform, the stimulus that helped pull the economy out of the trough of the recession?
Apart from this editorializing, the rest of the paragraph is not true. While the countries in the TPP do account for two-fifths of the world’s economy, it is not clear that it would “liberalize trade” between most of the countries. The United States already has trade agreements with most of the other countries in the TPP, including Mexico, Canada, and Australia. In these cases, most of the barriers to trade have already been eliminated. Even the barriers with other countries are already low in most cases. This means that the TPP will do little to lower trade barriers.
On the other hand, a quite explicit purpose of the deal, as noted in this article, is to increase protectionism in the form of longer and stronger patent and copyright protection. Perhaps the NYT likes these forms of protectionism, but they are still protectionism. This means that it is wrong to say that the TPP will liberalize trade. It is entirely possible that the net effect of the deal will be to increase the size of the trade barriers between the countries in the pact.
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The NYT apparently thinks it has a big news story in its article telling readers that companies use temporary visas to bring over tech workers who learn skills and then transfer them to workplaces in India and other countries. The jobs are then shifted overseas to take advantage of lower cost labor.
This is one of the main goals of the trade agreements the United States has signed over the last three decades. The point has been to allow U.S. firms to take advantage of lower cost labor in the developing world. For the most part this has meant shifting manufacturing jobs, like those in the steel and auto industry. However the same logic of the gains from trade applies to more highly skilled jobs, like the tech jobs discussed in this article.
It’s not clear why the NYT thinks this is news, this is what is supposed to be the result of recent trade deals. Those who are displaced by foreign competition are obviously losers, but the rest of the economy benefits by having lower priced goods and services.
On net, workers who tend to be similar to the ones being displaced are losers when this displacement happens on a large scale due to the overall effect on wages. Those who are largely protected from foreign competition (by protectionist restrictions, not economic laws), like doctors and lawyers, benefit. It’s not clear why the NYT thinks it has news here, it is reporting on how trade policy has been designed to work.
The NYT apparently thinks it has a big news story in its article telling readers that companies use temporary visas to bring over tech workers who learn skills and then transfer them to workplaces in India and other countries. The jobs are then shifted overseas to take advantage of lower cost labor.
This is one of the main goals of the trade agreements the United States has signed over the last three decades. The point has been to allow U.S. firms to take advantage of lower cost labor in the developing world. For the most part this has meant shifting manufacturing jobs, like those in the steel and auto industry. However the same logic of the gains from trade applies to more highly skilled jobs, like the tech jobs discussed in this article.
It’s not clear why the NYT thinks this is news, this is what is supposed to be the result of recent trade deals. Those who are displaced by foreign competition are obviously losers, but the rest of the economy benefits by having lower priced goods and services.
On net, workers who tend to be similar to the ones being displaced are losers when this displacement happens on a large scale due to the overall effect on wages. Those who are largely protected from foreign competition (by protectionist restrictions, not economic laws), like doctors and lawyers, benefit. It’s not clear why the NYT thinks it has news here, it is reporting on how trade policy has been designed to work.
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Steve Mufson picked up the Washington elite’s quest to get more money for some of the country’s biggest corporations by telling readers that the Export-Import Bank is not really corporate welfare because it makes a profit.
“It isn’t much welfare; the bank has an excellent lending record — a default rate of 0.175 percent as of September 2014 and a 50 percent recovery rate on defaulted loans — and the appropriation for about $110 million covers administrative expenses.”
This displays the sort of basic confusion on economics that readers have come to expect from the Washington Post. The point is that the government is subsidizing loans to some of the largest companies in the country. By relying on the creditworthiness of the U.S. government, the Ex-Im Bank is allowing a small number of huge companies, who always account for the overwhelming majority of Ex-Im bank lending, to get loans at below the market rate. This is similar to Fannie Mae and Freddie Mac which allow mortgage holders to get mortgages at a below market rate by providing a government guarantee.
This is a clear subsidy outside of Washington Post land. If it serves a public purpose, for example promoting homeownership, then it is arguably a good policy. But the nonsense and name-calling being put forth to justify the Ex-Im bank hardly make the case.
Anyhow, since the honchos will undoubtedly keep pushing the Ex-Im Bank until Boeing gets its money, how about a compromise? Any company that gets below market interest loans as a result of Ex-Im bank subsidies has to agree not to pay its top executives more than 10 times the president’s salary ($400k) for a five year period. That’s a $4 million hard cap on all compensation. The company’s top execs and all board members sign a certification to this effect promising them 10 years hard time if they lie.
What do you say folks? Can the CEO of Boeing and GE get by on $4 million a year? There are jobs at stake, right?
Steve Mufson picked up the Washington elite’s quest to get more money for some of the country’s biggest corporations by telling readers that the Export-Import Bank is not really corporate welfare because it makes a profit.
“It isn’t much welfare; the bank has an excellent lending record — a default rate of 0.175 percent as of September 2014 and a 50 percent recovery rate on defaulted loans — and the appropriation for about $110 million covers administrative expenses.”
This displays the sort of basic confusion on economics that readers have come to expect from the Washington Post. The point is that the government is subsidizing loans to some of the largest companies in the country. By relying on the creditworthiness of the U.S. government, the Ex-Im Bank is allowing a small number of huge companies, who always account for the overwhelming majority of Ex-Im bank lending, to get loans at below the market rate. This is similar to Fannie Mae and Freddie Mac which allow mortgage holders to get mortgages at a below market rate by providing a government guarantee.
This is a clear subsidy outside of Washington Post land. If it serves a public purpose, for example promoting homeownership, then it is arguably a good policy. But the nonsense and name-calling being put forth to justify the Ex-Im bank hardly make the case.
Anyhow, since the honchos will undoubtedly keep pushing the Ex-Im Bank until Boeing gets its money, how about a compromise? Any company that gets below market interest loans as a result of Ex-Im bank subsidies has to agree not to pay its top executives more than 10 times the president’s salary ($400k) for a five year period. That’s a $4 million hard cap on all compensation. The company’s top execs and all board members sign a certification to this effect promising them 10 years hard time if they lie.
What do you say folks? Can the CEO of Boeing and GE get by on $4 million a year? There are jobs at stake, right?
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Yesterday, Republican presidential candidate Donald Trump released his plan for changing the tax code. The basic story is that he would give big tax cuts across the board, with the largest tax cuts going to the wealthy. He assured everyone that it will be revenue neutral since it would lead to a huge spurt of economic growth. (His number was 6.0 percent, topping Jeb Bush’s 4.0 percent by two full percentage points.)
Many of the reports on the plan did note the growth assumption and pointed out that few, if any, economists took it seriously. As a practical matter, we have seen this one before. Ronald Reagan put in place a large tax cut in the 1980s and George W. Bush did the same in the last decade. You have to try very hard to find a positive growth effect from either. Certainly no one could make the case with a straight face that these sorts of proposals could even get us to Bush’s 4.0 percent number, much less Trump’s 6.0 percent.
But apart from what the tax cuts may or may not be able to do in terms of growth, there is also the matter of how the Federal Reserve Board would react. If that sounds strange to you then you should be very angry at the reporters at your favorite news outlet, because they should have been talking about this.
Suppose that Donald Trump’s tax cut really is the magic elixir that would get the economy to 6.0 percent annual growth. But what if the people at the Fed’s Open Market Committee (FOMC) don’t recognize this fact? Suppose the FOMC thinks the economy is still bound by the pre-Trump tax cut rules and believes that inflation will start to accelerate out of control if the unemployment rate falls much below its current 5.1 percent level.
In this case, we would expect to see the Fed raise interest rates sharply as they saw the Trump tax cuts boosting growth. Higher interest rates would slow house buying and new construction, discourage car sales, and put a crimp in both public and private investment. If the Fed raises interest rates high enough, it could fully offset the boost that Trump’s tax cut is giving to the economy. In this case, even though the Trump tax cuts might have been the best thing for the economy since the Internet (okay, better than the Internet), we wouldn’t see any dividend because the Fed would not allow it.
For this reason, the Fed’s likely response to a tax cut is a fundamental question that reporters should be asking. If the Fed is likely to simply slam on the brakes to offset any possible stimulus, then a tax plan will have little prospect of providing a growth dividend.
Since the press have been obsessing (rightly) over the possibility that the Fed is about to embark on a series of rate hikes, it would be reasonable to believe that someone would think to bring together the Fed’s interest rate policy and the candidate’s economic plans. Thus far it seems no reporters have discovered the connection.
Note: Typo corrected.
Yesterday, Republican presidential candidate Donald Trump released his plan for changing the tax code. The basic story is that he would give big tax cuts across the board, with the largest tax cuts going to the wealthy. He assured everyone that it will be revenue neutral since it would lead to a huge spurt of economic growth. (His number was 6.0 percent, topping Jeb Bush’s 4.0 percent by two full percentage points.)
Many of the reports on the plan did note the growth assumption and pointed out that few, if any, economists took it seriously. As a practical matter, we have seen this one before. Ronald Reagan put in place a large tax cut in the 1980s and George W. Bush did the same in the last decade. You have to try very hard to find a positive growth effect from either. Certainly no one could make the case with a straight face that these sorts of proposals could even get us to Bush’s 4.0 percent number, much less Trump’s 6.0 percent.
But apart from what the tax cuts may or may not be able to do in terms of growth, there is also the matter of how the Federal Reserve Board would react. If that sounds strange to you then you should be very angry at the reporters at your favorite news outlet, because they should have been talking about this.
Suppose that Donald Trump’s tax cut really is the magic elixir that would get the economy to 6.0 percent annual growth. But what if the people at the Fed’s Open Market Committee (FOMC) don’t recognize this fact? Suppose the FOMC thinks the economy is still bound by the pre-Trump tax cut rules and believes that inflation will start to accelerate out of control if the unemployment rate falls much below its current 5.1 percent level.
In this case, we would expect to see the Fed raise interest rates sharply as they saw the Trump tax cuts boosting growth. Higher interest rates would slow house buying and new construction, discourage car sales, and put a crimp in both public and private investment. If the Fed raises interest rates high enough, it could fully offset the boost that Trump’s tax cut is giving to the economy. In this case, even though the Trump tax cuts might have been the best thing for the economy since the Internet (okay, better than the Internet), we wouldn’t see any dividend because the Fed would not allow it.
For this reason, the Fed’s likely response to a tax cut is a fundamental question that reporters should be asking. If the Fed is likely to simply slam on the brakes to offset any possible stimulus, then a tax plan will have little prospect of providing a growth dividend.
Since the press have been obsessing (rightly) over the possibility that the Fed is about to embark on a series of rate hikes, it would be reasonable to believe that someone would think to bring together the Fed’s interest rate policy and the candidate’s economic plans. Thus far it seems no reporters have discovered the connection.
Note: Typo corrected.
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In his interview with Donald Trump on 60 Minutes, CBS reporter Scott Pelley felt the need to assert that Social Security is “a basket case.” Actually, according to the latest Social Security trustees report it can pay all scheduled benefits through 2033 with no changes whatsoever. If nothing is ever done to the program it is always projected to be able to pay retirees a larger real benefit than what they get today, or more than 75 percent of scheduled benefits. If we put in place tax increases comparable to those in the 1980s (equal to less than 10 percent of projected wage growth over the next three decades), the program would be fully funded indefinitely.
Given these facts, it would be interesting to know the basis for Pelley’s decision to call the program a basket case. Its prospects over the next two decades are almost certainly better than those of his network.
In his interview with Donald Trump on 60 Minutes, CBS reporter Scott Pelley felt the need to assert that Social Security is “a basket case.” Actually, according to the latest Social Security trustees report it can pay all scheduled benefits through 2033 with no changes whatsoever. If nothing is ever done to the program it is always projected to be able to pay retirees a larger real benefit than what they get today, or more than 75 percent of scheduled benefits. If we put in place tax increases comparable to those in the 1980s (equal to less than 10 percent of projected wage growth over the next three decades), the program would be fully funded indefinitely.
Given these facts, it would be interesting to know the basis for Pelley’s decision to call the program a basket case. Its prospects over the next two decades are almost certainly better than those of his network.
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Yeah, we all want our children to enjoy a more comfortable life than we do, but how much more comfortable does it have to be before we feel we have failed them? The Social Security Trustees project that before tax wages will be on average 55 percent higher in real terms than they are today. Suppose that we have a huge 5 percentage point increase in taxes to pay for Social Security and Medicare? That still leaves wages in thirty years more than 45 percent higher than they are today. Would that be unfair to our kids?
Robert Samuelson says it is. He wants us to raise the age at which we would qualify for Social Security to further tilt the income equation in favor of our kids. He says the problem is that middle-income people are living longer than low-income people. While raising the age of eligibility might seem to hurt lower-income people who don’t live as long, he says we can make benefits for the low-income elderly more generous, just as we have done with TANF. (Okay, Samuelson didn’t include the last part about TANF.)
Anyhow, the story of a growing gap in life expectancies is a problem of inequality. Similarly, the reason that many of us would not take for granted that our children will have before-tax wages that are 55 percent higher than today is due to inequality (as in the one percent). The rich got most of the benefits of growth over the last 35 years and it is very possible that they will get most of the benefits over the next 35 years.
And to address this problem, Robert Samuelson wants us to take away Social Security benefits from the middle class and make them work longer. Yes, that make sense. As the ad says, “only in the Washington Post.”
Yeah, we all want our children to enjoy a more comfortable life than we do, but how much more comfortable does it have to be before we feel we have failed them? The Social Security Trustees project that before tax wages will be on average 55 percent higher in real terms than they are today. Suppose that we have a huge 5 percentage point increase in taxes to pay for Social Security and Medicare? That still leaves wages in thirty years more than 45 percent higher than they are today. Would that be unfair to our kids?
Robert Samuelson says it is. He wants us to raise the age at which we would qualify for Social Security to further tilt the income equation in favor of our kids. He says the problem is that middle-income people are living longer than low-income people. While raising the age of eligibility might seem to hurt lower-income people who don’t live as long, he says we can make benefits for the low-income elderly more generous, just as we have done with TANF. (Okay, Samuelson didn’t include the last part about TANF.)
Anyhow, the story of a growing gap in life expectancies is a problem of inequality. Similarly, the reason that many of us would not take for granted that our children will have before-tax wages that are 55 percent higher than today is due to inequality (as in the one percent). The rich got most of the benefits of growth over the last 35 years and it is very possible that they will get most of the benefits over the next 35 years.
And to address this problem, Robert Samuelson wants us to take away Social Security benefits from the middle class and make them work longer. Yes, that make sense. As the ad says, “only in the Washington Post.”
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Everyone knows that the Washington Post wants to see Social Security and Medicare cut. The paper is constantly pushing this agenda in both its news and opinion pages. But how did the Post decide that President Obama shares this agenda?
It made this assertion in an article headlined, “Obama and Boehner both craved compromise — but could never reach it.” The piece tells readers:
“Those virtues [a desire to compromise for the national good] never resulted in progress, though, even on some of the political goals the men shared: lasting fiscal reforms, a meaningful immigration bill, keeping the government open at times of fiscal disagreement.”
The “lasting fiscal reforms” the Post is referring to here include its desired cuts in Social Security and Medicare. It is not clear why the Post would claim these cuts as a political goal of President Obama. He never claimed cuts to these programs as goals in his two presidential campaigns, nor did he ever try to promote cuts during his years in the Senate.
It is true that he was prepared to agree to cuts as part of a compromise with the Republicans in Congress, but that is hardly evidence that he saw such cuts as an end in itself. It is also worth noting in this respect (since the Post apparently doesn’t have access to such information) that the reductions in projected Medicare spending from lower cost growth vastly exceed the savings from the cuts that were proposed in the 2011 standoff between President Obama and the Republicans in Congress.
This means that if the point was to save the government money, we have already achieved more than the savings that would have come from the cuts being proposed. Of course if the point is to cut benefits to make life harder for seniors receiving Medicare, then further cuts would still be appropriate.
Note:
I see many people disagree with this one. Let me clarify my point. I am fully aware that Obama was prepared to go along with cuts to Social Security and Medicare. I spent a lot of time writing and arguing that this was a bad idea. The question is whether this was a priority that he set for himself.
He certainly never put it forward as a reason to put him in the White House, as in saying “if you elect me, I will cut SS and Medicare,” or a more politic “I will reform entitlements.” In terms of his aides statements on the issue, they always said that the cuts Obama was willing to agree to were compromises in order to preserve funding in other areas and to end the Bush tax cuts for the wealthy.
I really have no clue what is in Obama’s heart of hearts and I suspect the Washington Post does not either. For this reason, it should not asserting that he “craved” cutting benefits.
Everyone knows that the Washington Post wants to see Social Security and Medicare cut. The paper is constantly pushing this agenda in both its news and opinion pages. But how did the Post decide that President Obama shares this agenda?
It made this assertion in an article headlined, “Obama and Boehner both craved compromise — but could never reach it.” The piece tells readers:
“Those virtues [a desire to compromise for the national good] never resulted in progress, though, even on some of the political goals the men shared: lasting fiscal reforms, a meaningful immigration bill, keeping the government open at times of fiscal disagreement.”
The “lasting fiscal reforms” the Post is referring to here include its desired cuts in Social Security and Medicare. It is not clear why the Post would claim these cuts as a political goal of President Obama. He never claimed cuts to these programs as goals in his two presidential campaigns, nor did he ever try to promote cuts during his years in the Senate.
It is true that he was prepared to agree to cuts as part of a compromise with the Republicans in Congress, but that is hardly evidence that he saw such cuts as an end in itself. It is also worth noting in this respect (since the Post apparently doesn’t have access to such information) that the reductions in projected Medicare spending from lower cost growth vastly exceed the savings from the cuts that were proposed in the 2011 standoff between President Obama and the Republicans in Congress.
This means that if the point was to save the government money, we have already achieved more than the savings that would have come from the cuts being proposed. Of course if the point is to cut benefits to make life harder for seniors receiving Medicare, then further cuts would still be appropriate.
Note:
I see many people disagree with this one. Let me clarify my point. I am fully aware that Obama was prepared to go along with cuts to Social Security and Medicare. I spent a lot of time writing and arguing that this was a bad idea. The question is whether this was a priority that he set for himself.
He certainly never put it forward as a reason to put him in the White House, as in saying “if you elect me, I will cut SS and Medicare,” or a more politic “I will reform entitlements.” In terms of his aides statements on the issue, they always said that the cuts Obama was willing to agree to were compromises in order to preserve funding in other areas and to end the Bush tax cuts for the wealthy.
I really have no clue what is in Obama’s heart of hearts and I suspect the Washington Post does not either. For this reason, it should not asserting that he “craved” cutting benefits.
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