The NYT apparently is doing its part to try to push the Trans-Pacific Partnership (TPP). Today it ran a piece warning people in its headline “failure of Obama’s Trans-Pacific trade deal could hurt U.S. influence in Asia.” The piece presented the views of a variety of individuals who said the failure of the TPP would damage the standing of the United States in the region.
Remarkably the piece did not include the views of anyone who had a different opinion. This is remarkable because we know from the leaked chapters that there have been important objections to at least parts of the TPP from most of the countries in the deal. For example, all the countries disagreed with much of what the United States was pressing in the form of stronger and longer patent protection for prescription drugs. Australia objected so strongly to the investor state dispute settlement mechanism that they indicated that this provision would not apply to the country. (It’s not clear that this is final.)
Surely the NYT could have found someone in these countries who thinks that negatives, like higher drug prices and an extra-judicial legal system that can over-ride laws passed at the national and sub-national level, over-ride any gains from the modest tariff reductions in the TPP. For some reason the NYT opted not to present the views of any opponents of the TPP, wrongly implying to its readers that everyone believes that the failure of the TPP would be a serious negative.
The piece also included the wonderful line:
“The White House and its Republican free-trade allies in Congress are searching for ways to revive a bill that would extend aid to workers displaced by global trade agreements.”
The phrase “free-trade” is not accurate and does not belong in this piece.
The NYT apparently is doing its part to try to push the Trans-Pacific Partnership (TPP). Today it ran a piece warning people in its headline “failure of Obama’s Trans-Pacific trade deal could hurt U.S. influence in Asia.” The piece presented the views of a variety of individuals who said the failure of the TPP would damage the standing of the United States in the region.
Remarkably the piece did not include the views of anyone who had a different opinion. This is remarkable because we know from the leaked chapters that there have been important objections to at least parts of the TPP from most of the countries in the deal. For example, all the countries disagreed with much of what the United States was pressing in the form of stronger and longer patent protection for prescription drugs. Australia objected so strongly to the investor state dispute settlement mechanism that they indicated that this provision would not apply to the country. (It’s not clear that this is final.)
Surely the NYT could have found someone in these countries who thinks that negatives, like higher drug prices and an extra-judicial legal system that can over-ride laws passed at the national and sub-national level, over-ride any gains from the modest tariff reductions in the TPP. For some reason the NYT opted not to present the views of any opponents of the TPP, wrongly implying to its readers that everyone believes that the failure of the TPP would be a serious negative.
The piece also included the wonderful line:
“The White House and its Republican free-trade allies in Congress are searching for ways to revive a bill that would extend aid to workers displaced by global trade agreements.”
The phrase “free-trade” is not accurate and does not belong in this piece.
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Matt O’Brien treated us to a classic case of bad reasoning by economists. A survey of elite economists (you know, the type of people that couldn’t see an $8 trillion housing bubble) found that the vast majority said that the official income data understated the increase in the standard of living for the middle class over the last 35 years.
The explanation for this view is that new goods like cell phones and the Internet have vastly improved our standard of living in ways that are not picked up in the data. O’Brien suggests a thought experiment that has been put forward by this elite group. Would you be willing to trade an income of $50,000 in 2015 for an inflation adjusted $100,000 income in 1980, knowing that you can only buy the goods and services available in 1980?
The implication is that most of us would say no, since it would mean giving up our cell phones, Ipads and Ipods, smartphone cameras, wifi, and all sorts of other neat things. This may well be true, but there are two reasons why the economists raising this point flunk cost of living 101.
The first point is a narrow one. These folks are upset that our price indexes don’t have a way of picking up the benefits of new goods like television, refrigerators, and the polio vaccine. (Sorry, guess those are pretty old now. But the point is that important new goods are not new.) But good economists know that price indexes also don’t pick up the cost of these new goods. To be specific, we can complain that the consumer price index doesn’t pick up the gain from the wonders of a cell phone. That’s true. But it also doesn’t pick up the cost of buying the phone and paying for monthly service. (It picks up the change in these costs once they are included in the price basket, but not the initial cost.) With an important qualification that we will get to momentarily, we can assume the benefits are greater than the cost since people opt to buy cell phones, but that gap is much less than just counting the benefits alone, which it seems is how our elite economists view the issue.
The second point is that we adjust our society and living patterns around the technology we have. Ask someone who lived in the suburbs in the 1960s how they would feel living without a car. It would be pretty awful, but just 30 years earlier most middle class families did not have a car or think they needed one. To take a slightly more recent example, imagine living without air conditioning in the summer. Most middle class families did fifty years ago.
We have constructed a society that is built around cell phones and the Internet. Asking people to go without these items would be a real hardship because they have become integrated into their lives. Does this mean that we are better off in a society with these things than without? It probably does, but asking how our Internet/cell phone addict would do in a world without the Internet or cell phones is a silly question.
There is one more point worth mentioning. Our elite economist friends presumably don’t want to believe that well-being is relative. This could be important because there is a much sharper gap between the living standards of the rich and famous in 2015 than in 1980. Some people may take this into account in their assessment of their well-being. In other words they may feel deprived to some extent because their living standards are so much lower relative to the rich than was the case in 1980. We know the elite economists don’t want people to think like this, but some of the ignorant masses might anyhow. Maybe if they just took more economics…
Matt O’Brien treated us to a classic case of bad reasoning by economists. A survey of elite economists (you know, the type of people that couldn’t see an $8 trillion housing bubble) found that the vast majority said that the official income data understated the increase in the standard of living for the middle class over the last 35 years.
The explanation for this view is that new goods like cell phones and the Internet have vastly improved our standard of living in ways that are not picked up in the data. O’Brien suggests a thought experiment that has been put forward by this elite group. Would you be willing to trade an income of $50,000 in 2015 for an inflation adjusted $100,000 income in 1980, knowing that you can only buy the goods and services available in 1980?
The implication is that most of us would say no, since it would mean giving up our cell phones, Ipads and Ipods, smartphone cameras, wifi, and all sorts of other neat things. This may well be true, but there are two reasons why the economists raising this point flunk cost of living 101.
The first point is a narrow one. These folks are upset that our price indexes don’t have a way of picking up the benefits of new goods like television, refrigerators, and the polio vaccine. (Sorry, guess those are pretty old now. But the point is that important new goods are not new.) But good economists know that price indexes also don’t pick up the cost of these new goods. To be specific, we can complain that the consumer price index doesn’t pick up the gain from the wonders of a cell phone. That’s true. But it also doesn’t pick up the cost of buying the phone and paying for monthly service. (It picks up the change in these costs once they are included in the price basket, but not the initial cost.) With an important qualification that we will get to momentarily, we can assume the benefits are greater than the cost since people opt to buy cell phones, but that gap is much less than just counting the benefits alone, which it seems is how our elite economists view the issue.
The second point is that we adjust our society and living patterns around the technology we have. Ask someone who lived in the suburbs in the 1960s how they would feel living without a car. It would be pretty awful, but just 30 years earlier most middle class families did not have a car or think they needed one. To take a slightly more recent example, imagine living without air conditioning in the summer. Most middle class families did fifty years ago.
We have constructed a society that is built around cell phones and the Internet. Asking people to go without these items would be a real hardship because they have become integrated into their lives. Does this mean that we are better off in a society with these things than without? It probably does, but asking how our Internet/cell phone addict would do in a world without the Internet or cell phones is a silly question.
There is one more point worth mentioning. Our elite economist friends presumably don’t want to believe that well-being is relative. This could be important because there is a much sharper gap between the living standards of the rich and famous in 2015 than in 1980. Some people may take this into account in their assessment of their well-being. In other words they may feel deprived to some extent because their living standards are so much lower relative to the rich than was the case in 1980. We know the elite economists don’t want people to think like this, but some of the ignorant masses might anyhow. Maybe if they just took more economics…
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That’s what folks are asking after reading Peter Baker’s “news analysis” that told readers the Trans-Pacific Partnership (TPP):
“was a way to leave behind a positive legacy abroad, one that could be measured, he hoped, by the number of lives improved rather than by the number of bodies left behind.”
The discussion implies that the TPP is a way to pull together the countries of East Asia as allies. However, one of the main purposes of the TPP is to create stronger and longer patent and copyright protection. This will most importantly raise the cost of prescription drugs, but the prices of many other items will also rise due to increased protection.
We know that these increased protections were heavily contested by most of the other countries in the TPP due to the leaked chapters from Wikileaks which indicate where the countries disagree. It is difficult to see how making our trade partners in Asia pay more for drugs is a way to win their political allegiance. Ironically, insofar as higher drug prices keep patients from getting access to drugs, especially in developing countries, the TPP would be a policy whose impact could be measured by the number of bodies left behind.
That’s what folks are asking after reading Peter Baker’s “news analysis” that told readers the Trans-Pacific Partnership (TPP):
“was a way to leave behind a positive legacy abroad, one that could be measured, he hoped, by the number of lives improved rather than by the number of bodies left behind.”
The discussion implies that the TPP is a way to pull together the countries of East Asia as allies. However, one of the main purposes of the TPP is to create stronger and longer patent and copyright protection. This will most importantly raise the cost of prescription drugs, but the prices of many other items will also rise due to increased protection.
We know that these increased protections were heavily contested by most of the other countries in the TPP due to the leaked chapters from Wikileaks which indicate where the countries disagree. It is difficult to see how making our trade partners in Asia pay more for drugs is a way to win their political allegiance. Ironically, insofar as higher drug prices keep patients from getting access to drugs, especially in developing countries, the TPP would be a policy whose impact could be measured by the number of bodies left behind.
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Wow, it’s the sharing economy, everything is new and different. Hey, they don’t have to pay the fees that those stupid old taxi companies do, because you order them on the Internet.
Sorry to be a bit negative early on a Monday morning, but I was just reading in the Washington Post that Uber is arguing that it should not have to pay the same fees as traditional taxi companies to pick people up at airports. Uber says the fees are too high.
I have no strong opinion about the size of these fees, which are effectively a tax on taxi travel that is used to support the operation of the airport. However, there is no basis for Uber paying lower fees than their competitors in traditional taxi companies, even if it is cooler.
This is the sort of tripe that doesn’t pass the laugh test as serious policy. There is much about the regulation of the taxi industry that is archaic and should be changed, but the goal should be a uniform system of regulation, not a system that leaves the traditional sector heavily encumbered by regulation and allows Uber to do whatever it wants.
It is of course ironic to be reading about this in a newspaper owned by Jeff Bezos, who became one of the richest people in the world through his ownership in a company that does not collect the same sales tax as its brick and mortar competitors. Its savings on sales tax collections almost certainly exceeds its cumulative profits since it came into existence.
Wow, it’s the sharing economy, everything is new and different. Hey, they don’t have to pay the fees that those stupid old taxi companies do, because you order them on the Internet.
Sorry to be a bit negative early on a Monday morning, but I was just reading in the Washington Post that Uber is arguing that it should not have to pay the same fees as traditional taxi companies to pick people up at airports. Uber says the fees are too high.
I have no strong opinion about the size of these fees, which are effectively a tax on taxi travel that is used to support the operation of the airport. However, there is no basis for Uber paying lower fees than their competitors in traditional taxi companies, even if it is cooler.
This is the sort of tripe that doesn’t pass the laugh test as serious policy. There is much about the regulation of the taxi industry that is archaic and should be changed, but the goal should be a uniform system of regulation, not a system that leaves the traditional sector heavily encumbered by regulation and allows Uber to do whatever it wants.
It is of course ironic to be reading about this in a newspaper owned by Jeff Bezos, who became one of the richest people in the world through his ownership in a company that does not collect the same sales tax as its brick and mortar competitors. Its savings on sales tax collections almost certainly exceeds its cumulative profits since it came into existence.
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Regular readers of the NYT opinion pages must really be wondering what is going on in China. Just a few days ago the paper ran a piece giving us the terrible news that robots are taking all the jobs. According to a column by Martin Ford, China is rapidly bringing robots into its factories, leading to massive displacement of manufacturing workers. Ford tells readers:
“Chinese factory jobs may thus be poised to evaporate at an even faster pace than has been the case in the United States and other developed countries.”
This left us all wondering what China would do with all these workers displaced by robots. But today we discover that China is relaxing its one-child policy, not out of human rights considerations but because it doesn’t have enough people:
“Something had to be done. China’s population has stabilized at around 1.4 billion, but people over 60 now make up more than 13 percent of the population, and the percentage of people 14 years of age and under shrunk at least 6 percent between 2000 and 2010, reaching a new low of 16.4 percent in 2013. The rapid decline of China’s fertility rate — which has plunged to 1.6 percent, way below the 2.1 percent replacement rate — could stunt the country’s future economic growth. The declining working-age population will no longer be able to support the increasingly older Chinese population.”
Let’s contemplate that last sentence for a moment: a declining working-age population won’t be able to support a growing population of retirees. This is the sort of tripe that gets repeated endlessly by the folks who want to cut Social Security. Remember the robots? We don’t need as many workers to support retirees today as we did 20 or 30 years ago because of productivity growth. That has always been true. The robots and other improvements in technology allow each worker to be more productive.
In fact, productivity growth has occurred at an incredibly rapid pace in China over the last three decades so there is no reason that retirees can’t maintain the standard of living they had during their working years while still allowing future generations of workers to experience rapid increases in living standards. The people who can’t understand this fact need to do some more homework in economics before they start writing op-ed columns on the topic.
Regular readers of the NYT opinion pages must really be wondering what is going on in China. Just a few days ago the paper ran a piece giving us the terrible news that robots are taking all the jobs. According to a column by Martin Ford, China is rapidly bringing robots into its factories, leading to massive displacement of manufacturing workers. Ford tells readers:
“Chinese factory jobs may thus be poised to evaporate at an even faster pace than has been the case in the United States and other developed countries.”
This left us all wondering what China would do with all these workers displaced by robots. But today we discover that China is relaxing its one-child policy, not out of human rights considerations but because it doesn’t have enough people:
“Something had to be done. China’s population has stabilized at around 1.4 billion, but people over 60 now make up more than 13 percent of the population, and the percentage of people 14 years of age and under shrunk at least 6 percent between 2000 and 2010, reaching a new low of 16.4 percent in 2013. The rapid decline of China’s fertility rate — which has plunged to 1.6 percent, way below the 2.1 percent replacement rate — could stunt the country’s future economic growth. The declining working-age population will no longer be able to support the increasingly older Chinese population.”
Let’s contemplate that last sentence for a moment: a declining working-age population won’t be able to support a growing population of retirees. This is the sort of tripe that gets repeated endlessly by the folks who want to cut Social Security. Remember the robots? We don’t need as many workers to support retirees today as we did 20 or 30 years ago because of productivity growth. That has always been true. The robots and other improvements in technology allow each worker to be more productive.
In fact, productivity growth has occurred at an incredibly rapid pace in China over the last three decades so there is no reason that retirees can’t maintain the standard of living they had during their working years while still allowing future generations of workers to experience rapid increases in living standards. The people who can’t understand this fact need to do some more homework in economics before they start writing op-ed columns on the topic.
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The media seem to be getting better about referring to the Trans-Pacific Partnership as a “free-trade” agreement. Many articles now refer to it more neutrally as a “trade pact.” The Washington Post sort of split the difference today in describing it as a “a sweeping free-trade and regulatory pact,” but this still requires some further push back.
We know that the TPP will increase patent and copyright protections. These protections cover a large portion of the economy, most importantly prescription drugs, but also a wide variety of chemicals, tech products, and recorded movies, music, and video games.
We don’t know how much trade barriers will be reduced by the TPP. (The deal is secret.) Since the United States already has trade deals with most of the countries in the TPP, it is unlikely that it will lead to a further reduction in the barriers with these countries. This means the TPP will likely only reduce the barriers with the remaining five countries which include Japan, with whom the barriers are already relatively low, and four countries with whom the U.S. has relatively little trade.
There is no basis for assuming that the reduction in barriers with this group of countries will have greater economic significant than the increase in patent and copyright protection. Therefore, the reporters who call the TPP a “free-trade” agreement are simply editorializing, expressing their support for the pact. They do not have any evidence to support this characterization.
The media seem to be getting better about referring to the Trans-Pacific Partnership as a “free-trade” agreement. Many articles now refer to it more neutrally as a “trade pact.” The Washington Post sort of split the difference today in describing it as a “a sweeping free-trade and regulatory pact,” but this still requires some further push back.
We know that the TPP will increase patent and copyright protections. These protections cover a large portion of the economy, most importantly prescription drugs, but also a wide variety of chemicals, tech products, and recorded movies, music, and video games.
We don’t know how much trade barriers will be reduced by the TPP. (The deal is secret.) Since the United States already has trade deals with most of the countries in the TPP, it is unlikely that it will lead to a further reduction in the barriers with these countries. This means the TPP will likely only reduce the barriers with the remaining five countries which include Japan, with whom the barriers are already relatively low, and four countries with whom the U.S. has relatively little trade.
There is no basis for assuming that the reduction in barriers with this group of countries will have greater economic significant than the increase in patent and copyright protection. Therefore, the reporters who call the TPP a “free-trade” agreement are simply editorializing, expressing their support for the pact. They do not have any evidence to support this characterization.
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The NYT has a fascinating piece on how a Chinese drug company appears to have developed a successful treatment for Ebola, the use of which is being threatened by U.S. researchers complaining about patent infringement. The basic story is that the Chinese company used information in a U.S. patent to help develop their drug, which appears to be an effective treatment for Ebola. The patent holders are now upset that the Chinese company is making their drug widely available to Ebola victims, in some cases to people who would otherwise be taking part in controlled clinical trials. (In a controlled trial, half of the people are given a placebo, which can be a serious issue when treating a disease with a high fatality rate.)
Anyhow, it is difficult to believe that progress would not advance more rapidly if researchers did not try to bottle up their findings with patent protection. This is the sort of protection that will be increased in the Trans-Pacific Partnership (TPP). The impact of this protectionism in raising drug prices and impeding scientific progress has not been considered in the widely cited analysis of the TPP’s impact.
The NYT has a fascinating piece on how a Chinese drug company appears to have developed a successful treatment for Ebola, the use of which is being threatened by U.S. researchers complaining about patent infringement. The basic story is that the Chinese company used information in a U.S. patent to help develop their drug, which appears to be an effective treatment for Ebola. The patent holders are now upset that the Chinese company is making their drug widely available to Ebola victims, in some cases to people who would otherwise be taking part in controlled clinical trials. (In a controlled trial, half of the people are given a placebo, which can be a serious issue when treating a disease with a high fatality rate.)
Anyhow, it is difficult to believe that progress would not advance more rapidly if researchers did not try to bottle up their findings with patent protection. This is the sort of protection that will be increased in the Trans-Pacific Partnership (TPP). The impact of this protectionism in raising drug prices and impeding scientific progress has not been considered in the widely cited analysis of the TPP’s impact.
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The Wall Street Journal ran a piece headlined, “as minimum wages rise, small firms get squeezed.” Most readers probably would expect a story of how small businesses are being hit by higher minimum wages. But the business that provides the framing for the story doesn’t seem to fit the bill at all:
“Hannah Joseph dreams of bringing gourmet grilled hot dogs to food lovers coast to coast. But she now rules out owning any new restaurants beyond the two she and her husband currently operate in Indianapolis.
“The reason: high staffing costs, and growing competition for low-wage workers.
“‘I don’t want to deal with more employees,’ said Ms. Joseph, co-owner of King David Dogs, whose 10 or so staffers start at $7.50 an hour, 25 cents above the federal minimum.”
As the piece notes, the minimum wage in Indiana is just the federal minimum of $7.25 an hour and has not been raised in six years. The restaurant apparently is not bound by the minimum, since it is already paying 25 cents an hour more than the minimum, presumably to attract and retain workers.
Insofar as Hannah Joseph is being forced to scale back her plans it seems likely that it is mostly the result of a poorly conceived business strategy. She apparently underestimated the cost of labor and presumably other expenses. That likely would have been the case even if no one was raising the minimum wage, unless the Fed threw the economy back into a recession with high interest rates.
The Wall Street Journal ran a piece headlined, “as minimum wages rise, small firms get squeezed.” Most readers probably would expect a story of how small businesses are being hit by higher minimum wages. But the business that provides the framing for the story doesn’t seem to fit the bill at all:
“Hannah Joseph dreams of bringing gourmet grilled hot dogs to food lovers coast to coast. But she now rules out owning any new restaurants beyond the two she and her husband currently operate in Indianapolis.
“The reason: high staffing costs, and growing competition for low-wage workers.
“‘I don’t want to deal with more employees,’ said Ms. Joseph, co-owner of King David Dogs, whose 10 or so staffers start at $7.50 an hour, 25 cents above the federal minimum.”
As the piece notes, the minimum wage in Indiana is just the federal minimum of $7.25 an hour and has not been raised in six years. The restaurant apparently is not bound by the minimum, since it is already paying 25 cents an hour more than the minimum, presumably to attract and retain workers.
Insofar as Hannah Joseph is being forced to scale back her plans it seems likely that it is mostly the result of a poorly conceived business strategy. She apparently underestimated the cost of labor and presumably other expenses. That likely would have been the case even if no one was raising the minimum wage, unless the Fed threw the economy back into a recession with high interest rates.
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