Feel informed? That’s the information you would have gotten from reading the NYT article on the debate over a new transportation bill. In case you cared, this comes to about 1.8 percent of projected federal spending over the next four years or about $240 per person per year. But hey, everyone knows how much $302 billion over the next four years is.
Feel informed? That’s the information you would have gotten from reading the NYT article on the debate over a new transportation bill. In case you cared, this comes to about 1.8 percent of projected federal spending over the next four years or about $240 per person per year. But hey, everyone knows how much $302 billion over the next four years is.
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Wonkblog let down its readers badly in a piece on Sovaldi, the hepatitis C drug that Gilead Sciences is marketing in the United States at the price of $84,000 per treatment. While the post is headlined with the question in the title, it never makes the obvious point that the drug really doesn’t “cost” $84,000.
This is the price that Gilead Sciences charges. It is able to get away with charging the price because the government gave it a patent monopoly, which means that any competitors would be arrested. In India, where the government ruled that the drug did not deserve a patent (it is a combination drug, not a new chemical compound) the generic version is sold for less than $1,000. “How do you pay for a drug that costs $1,000?” is a much simpler question to answer.
Of course if we did not give drug companies patent monopolies we would need an alternative mechanism for financing research, but such alternatives do exist as people know who have heard of the National Institutes of Health, which get $30 billion a year from the government. (The Defense Department provides another example of how research and development can be paid for upfront, rather than recovered through patent monopolies.)
If the research was financed up front we would not have to deal with Wonkblog’s $84,000 question. We also wouldn’t be giving drug companies an incredible incentive to lie, cheat, and steal in order to maximize the sale of a product on which they have a mark-up in the neighborhood of 10,000 percent.
Note: Typos corrected, thanks to Robert Salzberg.
Wonkblog let down its readers badly in a piece on Sovaldi, the hepatitis C drug that Gilead Sciences is marketing in the United States at the price of $84,000 per treatment. While the post is headlined with the question in the title, it never makes the obvious point that the drug really doesn’t “cost” $84,000.
This is the price that Gilead Sciences charges. It is able to get away with charging the price because the government gave it a patent monopoly, which means that any competitors would be arrested. In India, where the government ruled that the drug did not deserve a patent (it is a combination drug, not a new chemical compound) the generic version is sold for less than $1,000. “How do you pay for a drug that costs $1,000?” is a much simpler question to answer.
Of course if we did not give drug companies patent monopolies we would need an alternative mechanism for financing research, but such alternatives do exist as people know who have heard of the National Institutes of Health, which get $30 billion a year from the government. (The Defense Department provides another example of how research and development can be paid for upfront, rather than recovered through patent monopolies.)
If the research was financed up front we would not have to deal with Wonkblog’s $84,000 question. We also wouldn’t be giving drug companies an incredible incentive to lie, cheat, and steal in order to maximize the sale of a product on which they have a mark-up in the neighborhood of 10,000 percent.
Note: Typos corrected, thanks to Robert Salzberg.
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Wow, the pundit class is really worried about the Export-Import Bank reauthorization. Today’s big shot comes from NYT columnist Joe Nocera.
Nocera is honest enough to acknowledge that big companies like Boeing and Caterpillar are the main recipients of support. The Export-Import bank supporters have been pushing the line that most loans go to small businesses. This is of course true, but most of the money goes to the Boeings and Caterpillars, and serious people care about the money, not the number of loans going out the bank’s door.
Nocera’s twist is that real beneficiaries are the customers of the big companies, not the companies:
“First, customers of these big companies get the bulk of the Ex-Im Bank’s assistance. …
“Second, most of the arguments made against the Ex-Im Bank revolve around its help to the big companies, not the small ones. For instance, it is argued that big companies have their own means of helping customers finance deals. That’s true, but it’s the customers, not the companies, that are pushing for export credit guarantees. A Boeing source told me that it is hearing from customers and potential customers about the fate of the Ex-Im Bank. ‘It’s a big deal,’ my source said, especially in places like Africa, where conventional financing for aircraft is hard to come by.”
Okay, this one should get be worth a big burst of laughter from a comedy show laugh track. Imagine that, a “Boeing source” told a New York Times columnist that the Export-Import Bank is really about helping the companies customers. Yeah, how could anyone question that. (This is like when companies oppose pollution regulations because they are worried about their workers’ jobs.)
The story here is not very complicated for believers in economics. If there were no subsidies from the Bank, Boeing would have to accept somewhat lower profits on its deals. It would likely make up some, but not all, of the value of the Bank’s subsidy. This means that the customers would be looking at slightly higher prices. Life’s tough. (Let’s get a list of the customers and see if they rank higher than veterans or inner city kids as beneficiaries of the taxpayers largesse.)
In some cases, the higher price will mean that Boeing will lose the deal to a competitor. That’s known as capitalism, it happens all the time.
It speaks volumes that at the same time the establishment pundits are getting hysterical over the dire consequences of not reauthorizing the Ex-Im Bank, the WTO issued a ruling against the U.S. over tariffs against Chinese and Indian steel imports. This ruling is likely to cost more U.S. jobs than the shutting of the Ex-Im Bank, but odds are none of the pundits will speak against it. Draw your own conclusions.
Of course the real free trade position is to lower the value of the dollar against other countries’ currencies. That is how a trade deficit is supposed to be corrected in a world of floating exchange rates, like the one we are supposed to have. However the dollar does not fall to bring our deficit into balance because many countries, most notably China, buy up hundreds of billions of dollars to keep the dollar over-valued. The over-valued dollar makes our exports expensive (like taking away the subsidy from the Ex-Im Bank) and makes imports cheaper to people in the United States, crowding out domestically produced goods.
In an economy suffering from secular stagnation, we have no market mechanism to replace the $500 billion dollars in demand (3 percent of GDP) lost to the trade deficit. Adding in a multiplier effect, this deficit costs us around $750 billion in annual output or around 6 million jobs. Unlike the Ex-Im Bank, there is real money and real jobs at stake with the value of the dollar. It would be great for Joe Nocera to write about that.
Wow, the pundit class is really worried about the Export-Import Bank reauthorization. Today’s big shot comes from NYT columnist Joe Nocera.
Nocera is honest enough to acknowledge that big companies like Boeing and Caterpillar are the main recipients of support. The Export-Import bank supporters have been pushing the line that most loans go to small businesses. This is of course true, but most of the money goes to the Boeings and Caterpillars, and serious people care about the money, not the number of loans going out the bank’s door.
Nocera’s twist is that real beneficiaries are the customers of the big companies, not the companies:
“First, customers of these big companies get the bulk of the Ex-Im Bank’s assistance. …
“Second, most of the arguments made against the Ex-Im Bank revolve around its help to the big companies, not the small ones. For instance, it is argued that big companies have their own means of helping customers finance deals. That’s true, but it’s the customers, not the companies, that are pushing for export credit guarantees. A Boeing source told me that it is hearing from customers and potential customers about the fate of the Ex-Im Bank. ‘It’s a big deal,’ my source said, especially in places like Africa, where conventional financing for aircraft is hard to come by.”
Okay, this one should get be worth a big burst of laughter from a comedy show laugh track. Imagine that, a “Boeing source” told a New York Times columnist that the Export-Import Bank is really about helping the companies customers. Yeah, how could anyone question that. (This is like when companies oppose pollution regulations because they are worried about their workers’ jobs.)
The story here is not very complicated for believers in economics. If there were no subsidies from the Bank, Boeing would have to accept somewhat lower profits on its deals. It would likely make up some, but not all, of the value of the Bank’s subsidy. This means that the customers would be looking at slightly higher prices. Life’s tough. (Let’s get a list of the customers and see if they rank higher than veterans or inner city kids as beneficiaries of the taxpayers largesse.)
In some cases, the higher price will mean that Boeing will lose the deal to a competitor. That’s known as capitalism, it happens all the time.
It speaks volumes that at the same time the establishment pundits are getting hysterical over the dire consequences of not reauthorizing the Ex-Im Bank, the WTO issued a ruling against the U.S. over tariffs against Chinese and Indian steel imports. This ruling is likely to cost more U.S. jobs than the shutting of the Ex-Im Bank, but odds are none of the pundits will speak against it. Draw your own conclusions.
Of course the real free trade position is to lower the value of the dollar against other countries’ currencies. That is how a trade deficit is supposed to be corrected in a world of floating exchange rates, like the one we are supposed to have. However the dollar does not fall to bring our deficit into balance because many countries, most notably China, buy up hundreds of billions of dollars to keep the dollar over-valued. The over-valued dollar makes our exports expensive (like taking away the subsidy from the Ex-Im Bank) and makes imports cheaper to people in the United States, crowding out domestically produced goods.
In an economy suffering from secular stagnation, we have no market mechanism to replace the $500 billion dollars in demand (3 percent of GDP) lost to the trade deficit. Adding in a multiplier effect, this deficit costs us around $750 billion in annual output or around 6 million jobs. Unlike the Ex-Im Bank, there is real money and real jobs at stake with the value of the dollar. It would be great for Joe Nocera to write about that.
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Economics just flies out the window when the business interests want to get a trade deal passed. The NYT gave us more evidence of this fact in an article on the state of negotiations on the Transatlantic Trade and Investment Partnership (TTIP).
The article tells us that the TTIP appears to be facing troubles because of the opposition of environmental and consumer groups and the recent spying scandal in Germany. This opposition is presented as sort of tragic given the need for a deal:
“From the European side, new impetus for freer trade came on Monday in the form of new industrial production data indicating that the eurozone’s incipient economic recovery might have taken a step backward.”
You’ve got to love this one. Europe just got new data showing that industrial production was weak last month, therefore it needs to push ahead with a trade agreement, that in the most optimistic scenario will not be signed before the end of the year. It will then be phased in over the next decade. Yeah, that’s a good way of addressing weak economic data from May.
What’s more striking is the mix of a discussion of real trade issues with regulatory issues that business interests are using to obstruct progress on trade. The starting point of the piece is how current trade rules cause Mercedes-Benz and Freightliner to take apart cargo vans in Europe so that they can be shipped to the United States to be reassembled. Of course this is a pointless source of inefficiency and waste. The vans could be sold more cheaply to consumers if they could be shipped as is, without the needless dis-assembly and reassembly. Eliminating the rules that lead to this practice is a great story how an agreement can lead to economic gains.
But the piece goes on to tell us that the negotiators are interested in much more than eliminating trade barriers. According to the article, they want to take away Europeans’ right to set their own health, safety, and pollution standards. The article tells readers that the working proposal is that if a product meets standards in either the U.S. or Europe then it can be sold in both places.
This means, for example, that Europeans would have to give up plans to impose energy efficiency requirements on cars or other products, if the U.S. Congress didn’t agree to the same standards. Given that a large segment of the Congress claims not to believe in global warming, it is understandable that Europeans would not be inclined to accept this position. The same would apply to regulations of food, drugs, and other consumer products.
The article doesn’t mention this fact, but much of the focus of the deal will be on increasing forms of protectionism, specifically copyright and patent protection. These policies will raise prices and slow growth. Also, if the concern was in reducing barriers that raise prices, items like the protectionism that makes doctors’ pay twice as high in the United States as in Europe would be front and center. But of course reducing barriers that protect the earnings of highly paid professionals is never on the agenda in trade negotiations.
As a practical matter, if the agenda of TTIP were simply removing actual trade barriers, like the ones that provide the backdrop for this piece, the deal could probably be concluded and approved fairly quickly. However, these trade barriers are a small portion of the TTIP agenda. The weakening of consumer, safety, and enviromental regulations to make them more friendly to corporations is the main point of TTIP. Powerful business interests are happy to hold the real but modest economic gains from freer trade hostage in order to advance their regulatory agenda.
Economics just flies out the window when the business interests want to get a trade deal passed. The NYT gave us more evidence of this fact in an article on the state of negotiations on the Transatlantic Trade and Investment Partnership (TTIP).
The article tells us that the TTIP appears to be facing troubles because of the opposition of environmental and consumer groups and the recent spying scandal in Germany. This opposition is presented as sort of tragic given the need for a deal:
“From the European side, new impetus for freer trade came on Monday in the form of new industrial production data indicating that the eurozone’s incipient economic recovery might have taken a step backward.”
You’ve got to love this one. Europe just got new data showing that industrial production was weak last month, therefore it needs to push ahead with a trade agreement, that in the most optimistic scenario will not be signed before the end of the year. It will then be phased in over the next decade. Yeah, that’s a good way of addressing weak economic data from May.
What’s more striking is the mix of a discussion of real trade issues with regulatory issues that business interests are using to obstruct progress on trade. The starting point of the piece is how current trade rules cause Mercedes-Benz and Freightliner to take apart cargo vans in Europe so that they can be shipped to the United States to be reassembled. Of course this is a pointless source of inefficiency and waste. The vans could be sold more cheaply to consumers if they could be shipped as is, without the needless dis-assembly and reassembly. Eliminating the rules that lead to this practice is a great story how an agreement can lead to economic gains.
But the piece goes on to tell us that the negotiators are interested in much more than eliminating trade barriers. According to the article, they want to take away Europeans’ right to set their own health, safety, and pollution standards. The article tells readers that the working proposal is that if a product meets standards in either the U.S. or Europe then it can be sold in both places.
This means, for example, that Europeans would have to give up plans to impose energy efficiency requirements on cars or other products, if the U.S. Congress didn’t agree to the same standards. Given that a large segment of the Congress claims not to believe in global warming, it is understandable that Europeans would not be inclined to accept this position. The same would apply to regulations of food, drugs, and other consumer products.
The article doesn’t mention this fact, but much of the focus of the deal will be on increasing forms of protectionism, specifically copyright and patent protection. These policies will raise prices and slow growth. Also, if the concern was in reducing barriers that raise prices, items like the protectionism that makes doctors’ pay twice as high in the United States as in Europe would be front and center. But of course reducing barriers that protect the earnings of highly paid professionals is never on the agenda in trade negotiations.
As a practical matter, if the agenda of TTIP were simply removing actual trade barriers, like the ones that provide the backdrop for this piece, the deal could probably be concluded and approved fairly quickly. However, these trade barriers are a small portion of the TTIP agenda. The weakening of consumer, safety, and enviromental regulations to make them more friendly to corporations is the main point of TTIP. Powerful business interests are happy to hold the real but modest economic gains from freer trade hostage in order to advance their regulatory agenda.
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Floyd Norris had an interesting piece noting the incongruity between the relatively strong job growth we saw in the first half of 2014 and the near zero or possibly negative GDP growth for the period. (First quarter growth was -2.9 percent, second quarter growth will be positive, but quite possibly less than 2.9 percent.) While it is easy to explain the drop in first quarter GDP as an anomaly driven by falling inventories and bad weather, it is still difficult to reconcile with a rate of job growth of 230,000 a month.
At least part of this story is likely due to quirks in the data. One prominent quirk that has been overlooked has been the pattern of health care spending. Much has been made of the fact that spending on health care services fell in the first quarter, something we have not seen since the 1960s. While this drop is striking, it is somewhat less so when we look at the fourth quarter data.
The Bureau of Economic Analysis (BEA) reports that nominal spending on health care services rose at a 7.6 percent annual rate in the fourth quarter of 2013. This is almost twice the average pace for the prior two years. (I use nominal since I think “real” spending is of questionable meaning in health care. If we are given more of a drug that has no beneficial effect or have more unnecessary tests or procedures, real spending will increase. If better research ends this spending, it appears as a reduction in real spending even if this might be associated with better health.)
Taken on their face, the BEA numbers show a big surge in health care spending in the fourth quarter followed by an almost unprecedented reduction in spending in the first quarter. We could believe that this accurately describes what happened in the economy, or alternatively we can believe that the fourth quarter number overstated the actual increase in spending. I would lean toward the latter view. The data are never perfect and by definition, any overstatement in spending growth in one quarter leads to an understatement of growth in the next quarter.
Anyhow, that’s my story on health care spending. But the GDP growth data and the jobs data are still seriously out of line.
Floyd Norris had an interesting piece noting the incongruity between the relatively strong job growth we saw in the first half of 2014 and the near zero or possibly negative GDP growth for the period. (First quarter growth was -2.9 percent, second quarter growth will be positive, but quite possibly less than 2.9 percent.) While it is easy to explain the drop in first quarter GDP as an anomaly driven by falling inventories and bad weather, it is still difficult to reconcile with a rate of job growth of 230,000 a month.
At least part of this story is likely due to quirks in the data. One prominent quirk that has been overlooked has been the pattern of health care spending. Much has been made of the fact that spending on health care services fell in the first quarter, something we have not seen since the 1960s. While this drop is striking, it is somewhat less so when we look at the fourth quarter data.
The Bureau of Economic Analysis (BEA) reports that nominal spending on health care services rose at a 7.6 percent annual rate in the fourth quarter of 2013. This is almost twice the average pace for the prior two years. (I use nominal since I think “real” spending is of questionable meaning in health care. If we are given more of a drug that has no beneficial effect or have more unnecessary tests or procedures, real spending will increase. If better research ends this spending, it appears as a reduction in real spending even if this might be associated with better health.)
Taken on their face, the BEA numbers show a big surge in health care spending in the fourth quarter followed by an almost unprecedented reduction in spending in the first quarter. We could believe that this accurately describes what happened in the economy, or alternatively we can believe that the fourth quarter number overstated the actual increase in spending. I would lean toward the latter view. The data are never perfect and by definition, any overstatement in spending growth in one quarter leads to an understatement of growth in the next quarter.
Anyhow, that’s my story on health care spending. But the GDP growth data and the jobs data are still seriously out of line.
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In a Wonkblog post Matt O’Brien discusses central bank efforts to deal with bubbles. His starting point is the decision by the central bank in Sweden to begin raising interest rates in 2010, ostensibly to head off the development of a bubble there.
There are two points worth noting here. First, it is difficult to imagine what the central bankers were drinking in Sweden when they decided to start shooting at bubbles. A bubble that threatens the economy is a bubble that moves the economy. If there is a bubble in Uber stock or the price of hops, there is little consequence to the economy when the bubbles burst.
The crashes of the stock bubble and the housing bubble led to recessions because these bubbles were driving the economy. This was easy to see in the data in both cases. In the first case, the investment share of GDP hit the highest level in more than two decades as people were able to raise billions in IPOs for utterly nonsense dot.coms. Consumption surged to then record shares of income as the stock wealth effect caused spending to surge. This boost to the economy disappeared when the bubble burst.
There was a similar story with the housing bubble. Residential construction hit a record share of GDP, roughly 50 percent above its average over the prior two decades. Consumption surged to an even higher share of income, driven by the housing wealth effect. And, when this bubble burst we got the Great Recession.
There were no obvious distortions in the Swedish economy when its central bank started shooting at bubbles. Its savings rate was relatively high and the country had a huge trade surplus (as opposed to deficits in bubble driven economies like the U.S. and Spain). The bubbles that really matter are not hard to see. Economists like to pretend otherwise since almost all of them missed the last one, but that reflects the competence of economists, not the inherent difficulty in recognizing bubbles.
The other point is that central banks do have many tools other than interest rates to attack bubbles. My favorite is talk.
I know it doesn’t sound sophisticated and it’s not terribly mathematical, but I suspect it would have a very large impact on the housing market if Janet Yellen were to say that she thought house prices were over-valued and that the Fed would be prepared to take steps to bring prices in line with fundamentals. Note that I am referring to an explicit warning backed up by Fed research, not a mumbled “irrational exuberance” subsequently qualified by incoherent gibberish. I would certainly take such a warning seriously if I was thinking of buying a house.
I know this view is dismissed by economists, but it’s hard to see the downside of trying this path. The worst I’ve heard is that this could damage the Fed’s credibility if house prices didn’t fall. Given that we have lost many trillions of dollars of output and millions of people have seen their lives ruined from the collapse of the housing bubble and the ensuing recession, the risk of the Fed’s credibility seems a small price to pay in such circumstances.
In a Wonkblog post Matt O’Brien discusses central bank efforts to deal with bubbles. His starting point is the decision by the central bank in Sweden to begin raising interest rates in 2010, ostensibly to head off the development of a bubble there.
There are two points worth noting here. First, it is difficult to imagine what the central bankers were drinking in Sweden when they decided to start shooting at bubbles. A bubble that threatens the economy is a bubble that moves the economy. If there is a bubble in Uber stock or the price of hops, there is little consequence to the economy when the bubbles burst.
The crashes of the stock bubble and the housing bubble led to recessions because these bubbles were driving the economy. This was easy to see in the data in both cases. In the first case, the investment share of GDP hit the highest level in more than two decades as people were able to raise billions in IPOs for utterly nonsense dot.coms. Consumption surged to then record shares of income as the stock wealth effect caused spending to surge. This boost to the economy disappeared when the bubble burst.
There was a similar story with the housing bubble. Residential construction hit a record share of GDP, roughly 50 percent above its average over the prior two decades. Consumption surged to an even higher share of income, driven by the housing wealth effect. And, when this bubble burst we got the Great Recession.
There were no obvious distortions in the Swedish economy when its central bank started shooting at bubbles. Its savings rate was relatively high and the country had a huge trade surplus (as opposed to deficits in bubble driven economies like the U.S. and Spain). The bubbles that really matter are not hard to see. Economists like to pretend otherwise since almost all of them missed the last one, but that reflects the competence of economists, not the inherent difficulty in recognizing bubbles.
The other point is that central banks do have many tools other than interest rates to attack bubbles. My favorite is talk.
I know it doesn’t sound sophisticated and it’s not terribly mathematical, but I suspect it would have a very large impact on the housing market if Janet Yellen were to say that she thought house prices were over-valued and that the Fed would be prepared to take steps to bring prices in line with fundamentals. Note that I am referring to an explicit warning backed up by Fed research, not a mumbled “irrational exuberance” subsequently qualified by incoherent gibberish. I would certainly take such a warning seriously if I was thinking of buying a house.
I know this view is dismissed by economists, but it’s hard to see the downside of trying this path. The worst I’ve heard is that this could damage the Fed’s credibility if house prices didn’t fall. Given that we have lost many trillions of dollars of output and millions of people have seen their lives ruined from the collapse of the housing bubble and the ensuing recession, the risk of the Fed’s credibility seems a small price to pay in such circumstances.
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Most readers expect better than silly cliches from the New York Times. That is why it was striking to see an article on Svalbard, a small town in northern Norway, tell readers:
“But it [Svalbard] shuns the leftist, leveling consensus that according to conservative critics has made working almost a lifestyle choice in the rest of Norway.”
Hmmm, a leveling consensus that makes working a lifestyle choice? A quick visit over to the OECD’s website tells us that 75.1 percent of the people in Norway between the ages of 16 to 65 opt for the working lifestyle. That’s more than 7.0 percentage points above the 68.0 percent share of this age group that works in the United States.
It’s understandable that some people will say silly things about the Scandinavian welfare state, just as some people make silly statements about almost everything. However we don’t expect the NYT just to repeat whatever silly assertion that a reporter happened to overhear. That is not news.
Thanks to David Dyssegaard Kallick for calling this one to my attention.
Most readers expect better than silly cliches from the New York Times. That is why it was striking to see an article on Svalbard, a small town in northern Norway, tell readers:
“But it [Svalbard] shuns the leftist, leveling consensus that according to conservative critics has made working almost a lifestyle choice in the rest of Norway.”
Hmmm, a leveling consensus that makes working a lifestyle choice? A quick visit over to the OECD’s website tells us that 75.1 percent of the people in Norway between the ages of 16 to 65 opt for the working lifestyle. That’s more than 7.0 percentage points above the 68.0 percent share of this age group that works in the United States.
It’s understandable that some people will say silly things about the Scandinavian welfare state, just as some people make silly statements about almost everything. However we don’t expect the NYT just to repeat whatever silly assertion that a reporter happened to overhear. That is not news.
Thanks to David Dyssegaard Kallick for calling this one to my attention.
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That’s what millions are asking after hearing Morning Edition’s top of the hour news segment (sorry, no link). The segment referred to negotiations over emissions caps for greenhouse gases. It said that China argued that it should not be subject to the same rules that apply to other rich countries.
China was presumably making the argument that it was not a rich country and therefore should not be subject to the same rules as rich countries. While China’s economy is now larger than the U.S. economy on a purchasing power parity basis, since it has four times the population, on a per capita basis it is about fourth as rich. This means both that it has fewer resources to cope with the problem and that the average Chinese person is far less responsible for global warming than the average person in the United States.
It is also worth noting that in an era of secular stagnation, like the one we are in now, spending to slow global warming would increase employment and output. It is not a drain on the economy.
That’s what millions are asking after hearing Morning Edition’s top of the hour news segment (sorry, no link). The segment referred to negotiations over emissions caps for greenhouse gases. It said that China argued that it should not be subject to the same rules that apply to other rich countries.
China was presumably making the argument that it was not a rich country and therefore should not be subject to the same rules as rich countries. While China’s economy is now larger than the U.S. economy on a purchasing power parity basis, since it has four times the population, on a per capita basis it is about fourth as rich. This means both that it has fewer resources to cope with the problem and that the average Chinese person is far less responsible for global warming than the average person in the United States.
It is also worth noting that in an era of secular stagnation, like the one we are in now, spending to slow global warming would increase employment and output. It is not a drain on the economy.
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