That’s what a NYT article told readers this morning. Of course that is not exactly what the article told readers. Instead it said that billionaires received a total of $11.3 million in farm subsidies between 1995 to 2012. This is yet another example where the intent is to mislead people by using large numbers that they are not likely to understand.
In fact, the subsidies paid to billionaires were trivial in terms of the federal budget, spending on the program, or even as income to these billioniaires. (According to the piece, their collective net worth is $316 billion which means that the total payments over this 17 year period would be less than 0.004 percent of their net worth. The subsidies would mean the same to these billionaires as getting $20 over a 17 year period would mean to middle income family with $500,000 in assets.
The merits of the farm subsidy programs are not in any obvious way affected by these payments to billionaires. If the NYT is going to devote a piece to the issue of farm subsidies, the money going to billionaires should not be the main focus.
That’s what a NYT article told readers this morning. Of course that is not exactly what the article told readers. Instead it said that billionaires received a total of $11.3 million in farm subsidies between 1995 to 2012. This is yet another example where the intent is to mislead people by using large numbers that they are not likely to understand.
In fact, the subsidies paid to billionaires were trivial in terms of the federal budget, spending on the program, or even as income to these billioniaires. (According to the piece, their collective net worth is $316 billion which means that the total payments over this 17 year period would be less than 0.004 percent of their net worth. The subsidies would mean the same to these billionaires as getting $20 over a 17 year period would mean to middle income family with $500,000 in assets.
The merits of the farm subsidy programs are not in any obvious way affected by these payments to billionaires. If the NYT is going to devote a piece to the issue of farm subsidies, the money going to billionaires should not be the main focus.
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NPR did a piece on the pattern of subsidies created by Obamacare. It rightly noted that the Affordable Care Act restructures the individual market so that healthy people will subsidize less healthy people, just as is now the case in the market for employer provided insurance.
However it may have misled listeners about the size of the subsidies. It gave an example of a person who is being made worse off by the change in the structure of insurance under Obamacare:
“Dentist Aaron McLemore of Louisville, Ky., makes more than $100,000 a year and doesn’t qualify for any subsidy on the Obamacare exchange. The 31-year-old’s current policy is being canceled. A new policy from the exchange will more than double his monthly premium and boost his annual deductible to $7,000.”
Okay, the problem here is that the piece is telling us Mr. McLemore’s deductible, not his premium. If we assume that Mr. McLemore is healthy (he is supposed to be an example of a healthy person subsidizing the less healthy), then the size of the deductible is not likely to be of much relevance. He will most likely not incur expenses that would push him over a deductible floor. The item that would be most relevant to McLemore would be the premium he pays, since this is the money that actually comes out of his pocket.
Kentucky’s exchange will not give prices unless you actually register, but DC’s exchange lists bronze plans available for as little as $125 a month or $1,500 a year. While this may be more than McLemore was paying with his current plan, it still implies that he will be paying less than 1.5 percent of his annual income for health insurance. It would have been useful to report the premium on the plan that McLemore chose, since that would be the upper limit on the amount that he would subsidizing less healthy people — if he did not value the insurance at all.
NPR did a piece on the pattern of subsidies created by Obamacare. It rightly noted that the Affordable Care Act restructures the individual market so that healthy people will subsidize less healthy people, just as is now the case in the market for employer provided insurance.
However it may have misled listeners about the size of the subsidies. It gave an example of a person who is being made worse off by the change in the structure of insurance under Obamacare:
“Dentist Aaron McLemore of Louisville, Ky., makes more than $100,000 a year and doesn’t qualify for any subsidy on the Obamacare exchange. The 31-year-old’s current policy is being canceled. A new policy from the exchange will more than double his monthly premium and boost his annual deductible to $7,000.”
Okay, the problem here is that the piece is telling us Mr. McLemore’s deductible, not his premium. If we assume that Mr. McLemore is healthy (he is supposed to be an example of a healthy person subsidizing the less healthy), then the size of the deductible is not likely to be of much relevance. He will most likely not incur expenses that would push him over a deductible floor. The item that would be most relevant to McLemore would be the premium he pays, since this is the money that actually comes out of his pocket.
Kentucky’s exchange will not give prices unless you actually register, but DC’s exchange lists bronze plans available for as little as $125 a month or $1,500 a year. While this may be more than McLemore was paying with his current plan, it still implies that he will be paying less than 1.5 percent of his annual income for health insurance. It would have been useful to report the premium on the plan that McLemore chose, since that would be the upper limit on the amount that he would subsidizing less healthy people — if he did not value the insurance at all.
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Does that seem surprising? After all, people do choose to buy into the market voluntarily, why would African Americans and Hispanics buy stocks if the result was just to make white people richer? Well, I’m not talking about market manipulations, which may well have this result. I’m actually referring to an Urban Institute analysis of Social Security which was highlighted in an Economix blog post by Eduardo Porter.
This methodology compares the benefits that each group receives by decade, starting in the 1970s, with the taxes they pay into the system. It ignores the taxes that they paid into the system in prior decades. The result is that whites, primarily because they are older, receive more back relative to what they pay in each of the decades from the 1970s to 2030s.
While this is presented as a surprising result, it really should have been pretty self-evident. Imagine that we did the exact same sort of analysis with the stock market starting in the 1970s. We counted every dollar that a group received in dividends as a benefit as well as any net sales of stocks. In other words, the benefits for whites in the 1970s would be their dividends receipts, plus their net sales of stocks. Their payments into the system would be the net purchases of stocks.
Since whites already held large amounts of stock by the 1970s, their net purchases were probably small. It’s possible they were even negative. In this case, whites would be getting money back from the stock market even though they paid nothing into it. For both African Americans and Hispanics it is likely that they were net purchasers of stock, since relatively few African Americans and Hispanics owned much stock before 1970. Their dividend payouts in the 1970s would also be quite small.
If we looked at this ratio of benefits to payments into the system through the purchase of stock, it is virtually certain that the trade-off for whites would look much better for non-whites through the present and long into the future. By the Urban Institute methodology, non-whites are getting a bad deal from the stock market.
Is the comparison between the stock market and Social Security inappropriate? Suppose we had a privatized system where people were required to put 6.2 percent of their wages in a private account. We would be telling the exact same story.
Unfortunately there are many real issues of discrimination against African Americans and Hispanics in today’s economy. This story with Social Security is not one of them.
Does that seem surprising? After all, people do choose to buy into the market voluntarily, why would African Americans and Hispanics buy stocks if the result was just to make white people richer? Well, I’m not talking about market manipulations, which may well have this result. I’m actually referring to an Urban Institute analysis of Social Security which was highlighted in an Economix blog post by Eduardo Porter.
This methodology compares the benefits that each group receives by decade, starting in the 1970s, with the taxes they pay into the system. It ignores the taxes that they paid into the system in prior decades. The result is that whites, primarily because they are older, receive more back relative to what they pay in each of the decades from the 1970s to 2030s.
While this is presented as a surprising result, it really should have been pretty self-evident. Imagine that we did the exact same sort of analysis with the stock market starting in the 1970s. We counted every dollar that a group received in dividends as a benefit as well as any net sales of stocks. In other words, the benefits for whites in the 1970s would be their dividends receipts, plus their net sales of stocks. Their payments into the system would be the net purchases of stocks.
Since whites already held large amounts of stock by the 1970s, their net purchases were probably small. It’s possible they were even negative. In this case, whites would be getting money back from the stock market even though they paid nothing into it. For both African Americans and Hispanics it is likely that they were net purchasers of stock, since relatively few African Americans and Hispanics owned much stock before 1970. Their dividend payouts in the 1970s would also be quite small.
If we looked at this ratio of benefits to payments into the system through the purchase of stock, it is virtually certain that the trade-off for whites would look much better for non-whites through the present and long into the future. By the Urban Institute methodology, non-whites are getting a bad deal from the stock market.
Is the comparison between the stock market and Social Security inappropriate? Suppose we had a privatized system where people were required to put 6.2 percent of their wages in a private account. We would be telling the exact same story.
Unfortunately there are many real issues of discrimination against African Americans and Hispanics in today’s economy. This story with Social Security is not one of them.
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The NYT had a piece telling readers that growth in Africa has not been able to reduce the number of people in poverty. By not taking population growth into account, it wrongly implied that the continent is seeing rapid growth. It told readers:
“The continent is indeed posting gains — in 2013, sub-Saharan Africa’s growth rate is projected at 4.9 percent, a figure that would be the envy of any Western government.”
Actually, the 4.9 percent figure is not especially strong. Africa’s population growth is over 3.0 percent annually. This puts it per capita growth at less than 2.0 percent annually. That is actually weak for developing countries and in fact not something that Western governments would particularly envy. For example, if Japan’s economy grew at a rate of 1.7 percent a year, with a population that is declining at a 0.2 percent annual rate, it’s per capita GDP growth would be the same as sub-Saharan Africa.
Growth by itself will not reduce poverty if it is concentrated among the wealthy, but in fact, sub-Saharan Africa has not been seeing especially robust growth. Its problem is not just a question of distribution.
The NYT had a piece telling readers that growth in Africa has not been able to reduce the number of people in poverty. By not taking population growth into account, it wrongly implied that the continent is seeing rapid growth. It told readers:
“The continent is indeed posting gains — in 2013, sub-Saharan Africa’s growth rate is projected at 4.9 percent, a figure that would be the envy of any Western government.”
Actually, the 4.9 percent figure is not especially strong. Africa’s population growth is over 3.0 percent annually. This puts it per capita growth at less than 2.0 percent annually. That is actually weak for developing countries and in fact not something that Western governments would particularly envy. For example, if Japan’s economy grew at a rate of 1.7 percent a year, with a population that is declining at a 0.2 percent annual rate, it’s per capita GDP growth would be the same as sub-Saharan Africa.
Growth by itself will not reduce poverty if it is concentrated among the wealthy, but in fact, sub-Saharan Africa has not been seeing especially robust growth. Its problem is not just a question of distribution.
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The Trans-Pacific Partnership (TPP) is a trade deal that is being negotiated completely in secret. The main actors at the table are large corporate interests like Wall Street banks, multinational drug companies, and oil and gas companies. This might lead one to think that the end product will be an agreement that furthers the upward redistribution of income rather than benefits the bulk of the population. That seems especially likely since this is a “next generation” trade agreement that is primarily about regulations, not reducing traditional trade barriers like tariffs and quotas.
The result is likely to be a deal where corporations will use the trade agreement to block restrictions on their behavior that might otherwise be imposed by democratically elected governments. For example, the financial industry might use the deal to prohibit Dodd-Frank type restrictions that prevent the sort of abuses that led to the financial crisis. The oil and gas industries might use the deal to prohibit environmental restrictions on fracking. And the pharmaceutical industry might push for stronger patent-type protections. These will raise the price of drugs (like a tax) and slow economic growth.
Bizarrely, the NYT editorialized in favor of the TPP, concluding its piece:
“A good agreement would lower duties and trade barriers on most products and services, strengthen labor and environmental protections, limit the ability of governments to tilt the playing field in favor of state-owned firms and balance the interests of consumers and creators of intellectual property. Such a deal will not only help individual countries but set an example for global trade talks.”
Yes, boys and girls, Goldman Sachs, Exxon-Mobil and Pfizer will put together a deal that does all these things. This is serious?
The Trans-Pacific Partnership (TPP) is a trade deal that is being negotiated completely in secret. The main actors at the table are large corporate interests like Wall Street banks, multinational drug companies, and oil and gas companies. This might lead one to think that the end product will be an agreement that furthers the upward redistribution of income rather than benefits the bulk of the population. That seems especially likely since this is a “next generation” trade agreement that is primarily about regulations, not reducing traditional trade barriers like tariffs and quotas.
The result is likely to be a deal where corporations will use the trade agreement to block restrictions on their behavior that might otherwise be imposed by democratically elected governments. For example, the financial industry might use the deal to prohibit Dodd-Frank type restrictions that prevent the sort of abuses that led to the financial crisis. The oil and gas industries might use the deal to prohibit environmental restrictions on fracking. And the pharmaceutical industry might push for stronger patent-type protections. These will raise the price of drugs (like a tax) and slow economic growth.
Bizarrely, the NYT editorialized in favor of the TPP, concluding its piece:
“A good agreement would lower duties and trade barriers on most products and services, strengthen labor and environmental protections, limit the ability of governments to tilt the playing field in favor of state-owned firms and balance the interests of consumers and creators of intellectual property. Such a deal will not only help individual countries but set an example for global trade talks.”
Yes, boys and girls, Goldman Sachs, Exxon-Mobil and Pfizer will put together a deal that does all these things. This is serious?
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The obsession with healthy young people and Obamacare is getting really whacky. Yesterday the NYT had a piece reporting on the large number of people who would be able to get plans at little or no cost because of the subsidies provided under the Affordable Care Act. At one point it refers to comments from Mark V. Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School:
“The availability of zero-premium plans may make the deal especially enticing to the healthy young people the marketplace needs to succeed,… ‘This is such a good deal that you’d have to believe you were immortal not to really pick it up.'”
Actually the marketplace does not need heavily subsidized healthy young people to succeed. If healthy young people pay little or nothing for their insurance then it makes the adverse selection worse, not better. They are likely to have costs that exceed what they pay into the system. To succeed, the market needs healthy young people who do not have heavy subsidies and therefore pay more into the system than they receive back in benefits.
In fact, the key adjective is “healthy,” not “young.” To avoid adverse selection the system needs healthy people to sign up regardless of their age. It also needs people who earn enough so that they are actually paying a substantial portion of their insurance premium themselves. If the government is picking up the tab for the insurance, it doesn’t help the system’s finances.
Note:
The ACA provides additional payments to insurers if they get an especially unhealthy mix of clients so the issue really is the cost of the whole system, not whether some number of insurers are victims of adverse selection. Of course this will be a political question as to whether higher than expected costs lead to a scaling back of the system.
The obsession with healthy young people and Obamacare is getting really whacky. Yesterday the NYT had a piece reporting on the large number of people who would be able to get plans at little or no cost because of the subsidies provided under the Affordable Care Act. At one point it refers to comments from Mark V. Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School:
“The availability of zero-premium plans may make the deal especially enticing to the healthy young people the marketplace needs to succeed,… ‘This is such a good deal that you’d have to believe you were immortal not to really pick it up.'”
Actually the marketplace does not need heavily subsidized healthy young people to succeed. If healthy young people pay little or nothing for their insurance then it makes the adverse selection worse, not better. They are likely to have costs that exceed what they pay into the system. To succeed, the market needs healthy young people who do not have heavy subsidies and therefore pay more into the system than they receive back in benefits.
In fact, the key adjective is “healthy,” not “young.” To avoid adverse selection the system needs healthy people to sign up regardless of their age. It also needs people who earn enough so that they are actually paying a substantial portion of their insurance premium themselves. If the government is picking up the tab for the insurance, it doesn’t help the system’s finances.
Note:
The ACA provides additional payments to insurers if they get an especially unhealthy mix of clients so the issue really is the cost of the whole system, not whether some number of insurers are victims of adverse selection. Of course this will be a political question as to whether higher than expected costs lead to a scaling back of the system.
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Robert Samuelson has pretty much devoted his column to trying to distract readers from the policies that have redistributed income upward to the richest one percent, urging them instead to focus on high living seniors. The latest occasion is a new study from the St. Louis Federal Reserve Bank which found that median income for those aged 62 to 69 gained 12.3 percent to $50,825 from 2007 to 2012. It found that median for those over age 70 increased 15.6 percent to $31,512.
There are two points worth noting on this one. First is that while median family income did rise for older families, while it fell for younger people, the absolute income levels for those over age 62 were still considerably lower than for those between ages 40-61. The difference is 11.7 percent for those between the ages of 62-69. The gap in median incomes was 44.6 percent for those over age 70 compared with those ages 40-61. (One of the reasons for the rise in income is the mix of people over age 62 has skewed sharply downward over this period as baby boomers now fill the younger portion of the age group. The young elderly always have higher income since many are still working and they have not yet spent down their assets.)
The other factor worth noting is that much of the improvement in income is simply due to the fact that people are living longer so that more of these families are two person families now than was the case in 2007. If we look at the Census Bureau’s estimates for median person income, we find that this rose by 7.8 for women between the ages of 65-74 between 2007 and 2012, but just 3.2 percent for men. For men over age 75 median person income rose by 2.3 percent, while it fell by 1.7 percent for women over age 75.
This picture may still look better than the median income for younger people, but this is a story about having the losers fight among themselves. Since its 1999 peak, the median income for men from age 62-74 has risen by 7.4 percent. For women in this age group it rose by 13.9 percent. For men over age 75 it by just 0.007 percent, while for older women it fell by 1.1 percent.
This is a period in which average per capita income rose by 21.1 percent. Clearly the typical senior was not getting their share of the gains of growth even if they might have been doing somewhat better than the young. The big gainers were of course the Wall Street folks, the CEOs, and highly protected professionals like doctors and dentists. Yet Samuelson insists that we need to beat up on the elderly.
There is one other point about Samuelson’s agenda that deserves highlighting. He wants us to cut Social Security and Medicare because today’s seniors have not taken as big a hit as those who are younger. However, any cuts to Social Security and Medicare will almost certainly be phased in through time. This means that they will likely have a bigger impact on people who are today in their forties or fifties than the people now in their sixties and seventies. Since this age group has taken a big hit even by Samuelson’s measures, he is proposing cuts that will have their largest impact on exactly the group of people who have taken a big hit in the downturn with little time to recover. This doesn’t sound like good policy.
Robert Samuelson has pretty much devoted his column to trying to distract readers from the policies that have redistributed income upward to the richest one percent, urging them instead to focus on high living seniors. The latest occasion is a new study from the St. Louis Federal Reserve Bank which found that median income for those aged 62 to 69 gained 12.3 percent to $50,825 from 2007 to 2012. It found that median for those over age 70 increased 15.6 percent to $31,512.
There are two points worth noting on this one. First is that while median family income did rise for older families, while it fell for younger people, the absolute income levels for those over age 62 were still considerably lower than for those between ages 40-61. The difference is 11.7 percent for those between the ages of 62-69. The gap in median incomes was 44.6 percent for those over age 70 compared with those ages 40-61. (One of the reasons for the rise in income is the mix of people over age 62 has skewed sharply downward over this period as baby boomers now fill the younger portion of the age group. The young elderly always have higher income since many are still working and they have not yet spent down their assets.)
The other factor worth noting is that much of the improvement in income is simply due to the fact that people are living longer so that more of these families are two person families now than was the case in 2007. If we look at the Census Bureau’s estimates for median person income, we find that this rose by 7.8 for women between the ages of 65-74 between 2007 and 2012, but just 3.2 percent for men. For men over age 75 median person income rose by 2.3 percent, while it fell by 1.7 percent for women over age 75.
This picture may still look better than the median income for younger people, but this is a story about having the losers fight among themselves. Since its 1999 peak, the median income for men from age 62-74 has risen by 7.4 percent. For women in this age group it rose by 13.9 percent. For men over age 75 it by just 0.007 percent, while for older women it fell by 1.1 percent.
This is a period in which average per capita income rose by 21.1 percent. Clearly the typical senior was not getting their share of the gains of growth even if they might have been doing somewhat better than the young. The big gainers were of course the Wall Street folks, the CEOs, and highly protected professionals like doctors and dentists. Yet Samuelson insists that we need to beat up on the elderly.
There is one other point about Samuelson’s agenda that deserves highlighting. He wants us to cut Social Security and Medicare because today’s seniors have not taken as big a hit as those who are younger. However, any cuts to Social Security and Medicare will almost certainly be phased in through time. This means that they will likely have a bigger impact on people who are today in their forties or fifties than the people now in their sixties and seventies. Since this age group has taken a big hit even by Samuelson’s measures, he is proposing cuts that will have their largest impact on exactly the group of people who have taken a big hit in the downturn with little time to recover. This doesn’t sound like good policy.
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The Washington Post lead front page article has a headline telling readers that “sticker shock” is leading to “anger” over Obamacare. Whatever the reality of this anger, the information presented for the piece’s poster child is wrong.
The article begins by telling readers about a 58-year-old lawyer in Washington, DC who will see her premiums increase from $297 a month to $463 a month with a policy purchased through the exchange. The piece tells that with the policy purchased through the exchange her maximum out of pocket expenses would double. It then informs readers:
“That means she could end up paying at least $5,000 more a year than she does now.”
This conclusion does not follow. If this lawyer actually did hit the new maximum under the policy available through the exchanges, then she would almost certainly have been dropped from her other plan, since the insurer would otherwise be losing money on her. (If we assume the information given here is accurate, then if she just hit the maximum deductible for the exchange plan, it implies that her current insurer would have been paying out $3020 more over the course of the year than the insurer in the exchange. This is on a policy for which it collects $3,564 in premiums.)
Under current law, insurers can drop people with high bills or raise their rates. That is the point of Obamacare; it protects people who get serious illnesses from rate hikes or losing their insurance.
The Washington Post lead front page article has a headline telling readers that “sticker shock” is leading to “anger” over Obamacare. Whatever the reality of this anger, the information presented for the piece’s poster child is wrong.
The article begins by telling readers about a 58-year-old lawyer in Washington, DC who will see her premiums increase from $297 a month to $463 a month with a policy purchased through the exchange. The piece tells that with the policy purchased through the exchange her maximum out of pocket expenses would double. It then informs readers:
“That means she could end up paying at least $5,000 more a year than she does now.”
This conclusion does not follow. If this lawyer actually did hit the new maximum under the policy available through the exchanges, then she would almost certainly have been dropped from her other plan, since the insurer would otherwise be losing money on her. (If we assume the information given here is accurate, then if she just hit the maximum deductible for the exchange plan, it implies that her current insurer would have been paying out $3020 more over the course of the year than the insurer in the exchange. This is on a policy for which it collects $3,564 in premiums.)
Under current law, insurers can drop people with high bills or raise their rates. That is the point of Obamacare; it protects people who get serious illnesses from rate hikes or losing their insurance.
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The official German unemployment rate includes people working part-time who would like full-time jobs. For this reason it is not directly comparable to the unemployment rate in the United States. Fortunately the OECD produces a harmonized unemployment rate for its members which is directly comparable.
For this reason it was needlessly misleading for the NYT to tell readers that the unemployment rate across Germany is 6.5 percent. This refers to the official Germany government measure. The OECD harmonized unemployment rate for Germany is 5.2 percent.
The official German unemployment rate includes people working part-time who would like full-time jobs. For this reason it is not directly comparable to the unemployment rate in the United States. Fortunately the OECD produces a harmonized unemployment rate for its members which is directly comparable.
For this reason it was needlessly misleading for the NYT to tell readers that the unemployment rate across Germany is 6.5 percent. This refers to the official Germany government measure. The OECD harmonized unemployment rate for Germany is 5.2 percent.
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That’s what the headline of the front page Washington Post story might have read if the purpose was to inform readers. Instead the lengthy piece (which covers the whole back page) told readers that Social Security paid out $133 million in benefits to people who were dead over the last three years.
While it is useful to weed out such improper payments, this piece likely led many readers to wrongly conclude that such payments are a major cost to the program. They are not. Nothing about the finances of Social Security would be noticeably changed if the amount of such improper payments were immediately reduced to zero.
If the Washington Post followed the NYT’s commitment to putting big numbers in context, it would have expressed $133 million as a share of the $2102 billion paid out in benefits over the relevant time frame. That way readers would realize that these mistakes have little impact on the program’s financial condition.
That’s what the headline of the front page Washington Post story might have read if the purpose was to inform readers. Instead the lengthy piece (which covers the whole back page) told readers that Social Security paid out $133 million in benefits to people who were dead over the last three years.
While it is useful to weed out such improper payments, this piece likely led many readers to wrongly conclude that such payments are a major cost to the program. They are not. Nothing about the finances of Social Security would be noticeably changed if the amount of such improper payments were immediately reduced to zero.
If the Washington Post followed the NYT’s commitment to putting big numbers in context, it would have expressed $133 million as a share of the $2102 billion paid out in benefits over the relevant time frame. That way readers would realize that these mistakes have little impact on the program’s financial condition.
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