Jaron Lanier must have won an award for most ridiculous idea on the digital economy with the grand prize being a lengthy column in the NYT. The great gift of the Internet is that it can costlessly deliver massive amounts of information and creative material almost anywhere in the world.
So what is Jaron Lanier’s brilliant idea? He wants to set up a tollgate charging for every bit of information. What a great idea — maybe if we give Mr. Laner more time to develop ideas he will come up with a new tax on the printing press.
There are simple ways to fund creative work that don’t require an information tax on every item transferred (here’s mine), but it requires that people think slightly creatively. I know that it is nearly impossible among an intellectual class that thought Reinhart-Rogoff’s work on debt and growth was serious economics, but that is the world in which we live.
Note: typo fixed.
Jaron Lanier must have won an award for most ridiculous idea on the digital economy with the grand prize being a lengthy column in the NYT. The great gift of the Internet is that it can costlessly deliver massive amounts of information and creative material almost anywhere in the world.
So what is Jaron Lanier’s brilliant idea? He wants to set up a tollgate charging for every bit of information. What a great idea — maybe if we give Mr. Laner more time to develop ideas he will come up with a new tax on the printing press.
There are simple ways to fund creative work that don’t require an information tax on every item transferred (here’s mine), but it requires that people think slightly creatively. I know that it is nearly impossible among an intellectual class that thought Reinhart-Rogoff’s work on debt and growth was serious economics, but that is the world in which we live.
Note: typo fixed.
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The “grand bargain” to cut Social Security and Medicare is looking increasingly dead these days. Projections for future deficits have fallen sharply because of the sequester, higher than expected tax revenues (although with slower than expected growth), and much slower projected health care cost growth.
This situation has made the Post very unhappy. It ran a front page piece with the headline, “urgency on the debt fades with big issues unsolved.” Of course this is not true.
The big issues have been solved, we will maintain Social Security and Medicare pretty much in their current form. The Post doesn’t like this fact, but this is a position that is supported by the vast majority of people across the political spectrum.
We haven’t decided how we will make up projected shortfalls in these programs in the decades ahead, but so what? There is no obvious reason why we have to schedule tax increases decades ahead, we have often in the past raised taxes with little or no notice. (In 1993 Congress actually raised taxes retroactively, since the income tax increase applied to calendar year 1993, but wasn’t passed into law until the summer.)
To express its unhappiness with Congress’ unwillingness to adopt its agenda, the Post turned to both the Concord Coalition, which was founded by Peter Peterson and the Committee for a Responsible Federal Budget, which is funded by Peter Peterson. There was no one cited in the article who has been a vocal proponent of addressing the jobs crisis, who could have pointed out that the deficit hawks have been shown 180 degrees wrong in their predictions about interest rates and inflation.
Remarkably, while the piece complained about Congress’ inaction on cutting Medicare costs, it neglected to mention that the projected shortfall in the program has been reduced by almost 70 percent since 2008. One of the factors behind this drop is the cost control measures in the Affordable Care Act.
The “grand bargain” to cut Social Security and Medicare is looking increasingly dead these days. Projections for future deficits have fallen sharply because of the sequester, higher than expected tax revenues (although with slower than expected growth), and much slower projected health care cost growth.
This situation has made the Post very unhappy. It ran a front page piece with the headline, “urgency on the debt fades with big issues unsolved.” Of course this is not true.
The big issues have been solved, we will maintain Social Security and Medicare pretty much in their current form. The Post doesn’t like this fact, but this is a position that is supported by the vast majority of people across the political spectrum.
We haven’t decided how we will make up projected shortfalls in these programs in the decades ahead, but so what? There is no obvious reason why we have to schedule tax increases decades ahead, we have often in the past raised taxes with little or no notice. (In 1993 Congress actually raised taxes retroactively, since the income tax increase applied to calendar year 1993, but wasn’t passed into law until the summer.)
To express its unhappiness with Congress’ unwillingness to adopt its agenda, the Post turned to both the Concord Coalition, which was founded by Peter Peterson and the Committee for a Responsible Federal Budget, which is funded by Peter Peterson. There was no one cited in the article who has been a vocal proponent of addressing the jobs crisis, who could have pointed out that the deficit hawks have been shown 180 degrees wrong in their predictions about interest rates and inflation.
Remarkably, while the piece complained about Congress’ inaction on cutting Medicare costs, it neglected to mention that the projected shortfall in the program has been reduced by almost 70 percent since 2008. One of the factors behind this drop is the cost control measures in the Affordable Care Act.
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I’m glad that Paul Krugman made this point clearly in his blog today. I wish that he had done it five years ago. I made this point repeatedly (here, here, and here).
It is remarkable how many economics reporters and even economists seem to think that something magic happens when inflation crosses the zero line and turns negative. This is absurd on its face. The inflation rate is an aggregate of millions of different price changes (quality adjusted). If it is near zero then a very large number of the changes will already be negative. When it falls below zero it simply means that the negative share is somewhat higher. How can that be a qualitatively different economic universe?
I’m glad that Paul Krugman made this point clearly in his blog today. I wish that he had done it five years ago. I made this point repeatedly (here, here, and here).
It is remarkable how many economics reporters and even economists seem to think that something magic happens when inflation crosses the zero line and turns negative. This is absurd on its face. The inflation rate is an aggregate of millions of different price changes (quality adjusted). If it is near zero then a very large number of the changes will already be negative. When it falls below zero it simply means that the negative share is somewhat higher. How can that be a qualitatively different economic universe?
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The NYT picked up a twitter comment from Justin Wolfers and told readers that the United States is lagging other countries in job creation. The blog post has a graph showing a higher rate of job growth in several other wealthy countries. The piece then tells readers that the United States is doing a poor job translating economic growth into job growth.
Actually the U.S. has been doing a very good job translating very weak growth (@ 2.0 percent over the last two years) into jobs. This is shown by the extraordinarily weak productivity growth over this period, it’s just that other countries are doing better in generating jobs from even weaker growth.
The NYT picked up a twitter comment from Justin Wolfers and told readers that the United States is lagging other countries in job creation. The blog post has a graph showing a higher rate of job growth in several other wealthy countries. The piece then tells readers that the United States is doing a poor job translating economic growth into job growth.
Actually the U.S. has been doing a very good job translating very weak growth (@ 2.0 percent over the last two years) into jobs. This is shown by the extraordinarily weak productivity growth over this period, it’s just that other countries are doing better in generating jobs from even weaker growth.
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The Wall Street Journal reports that Olli Rehn, the European Union’s top economic official, is very upset over a new IMF report acknowledging mistakes in the bailout of Greece. Rehn apparently feels no mistakes were made. Hey 25 percent unemployment? What could be wrong?
The Wall Street Journal reports that Olli Rehn, the European Union’s top economic official, is very upset over a new IMF report acknowledging mistakes in the bailout of Greece. Rehn apparently feels no mistakes were made. Hey 25 percent unemployment? What could be wrong?
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Some of us (well at least me) are surprised that an economy growing at a rate of 2.0 percent or less can create around 1.8 million jobs a year. That doesn’t seem to fit. We had been seeing productivity growth of close to 2.5 percent. At that rate the economy could grow 2.0 percent a year with no additional labor. So what is going on?
Well, we aren’t seeing productivity growth of 2.5 percent a year any more. In fact, in the last two years productivity growth has grown at less than a 1.0 percent annual rate. This is a sharp departure from the pattern in past upturns where we have seen strong productivity growth in the first years of the recovery.
Source: Bureau of Labor Statistics.
This is the secret to job growth in this recovery. The question is whether the slowdown in productivity growth is permanent or just a response to a weak economy. The latter story would be that workers are taking low paying and low productivity jobs because there is nothing else available. This would be the more optimistic scenario since it would mean once we ever got a policy that actually generated demand we would return to a path of healthy productivity growth.
Remarkably, we have a whole group of policy types running around worried that we won’t have any jobs because robots will displace everyone. This is occurring at a time where the data is showing the exact opposite with the recent stretch of slow productivity growth. This would be amazing until we remember that these are the folks that took the Reinhart-Rogoff story seriously for the last three years.
Note:
The X-axis shows productivity in the first 15 quarters of the recovery (except for the 1970-73 upturn, which didn’t last that long). For reasons unknown to me, the tick marks disappeared in the transition from Excel. Obviously this is yet another Excel spreadsheet error.
Some of us (well at least me) are surprised that an economy growing at a rate of 2.0 percent or less can create around 1.8 million jobs a year. That doesn’t seem to fit. We had been seeing productivity growth of close to 2.5 percent. At that rate the economy could grow 2.0 percent a year with no additional labor. So what is going on?
Well, we aren’t seeing productivity growth of 2.5 percent a year any more. In fact, in the last two years productivity growth has grown at less than a 1.0 percent annual rate. This is a sharp departure from the pattern in past upturns where we have seen strong productivity growth in the first years of the recovery.
Source: Bureau of Labor Statistics.
This is the secret to job growth in this recovery. The question is whether the slowdown in productivity growth is permanent or just a response to a weak economy. The latter story would be that workers are taking low paying and low productivity jobs because there is nothing else available. This would be the more optimistic scenario since it would mean once we ever got a policy that actually generated demand we would return to a path of healthy productivity growth.
Remarkably, we have a whole group of policy types running around worried that we won’t have any jobs because robots will displace everyone. This is occurring at a time where the data is showing the exact opposite with the recent stretch of slow productivity growth. This would be amazing until we remember that these are the folks that took the Reinhart-Rogoff story seriously for the last three years.
Note:
The X-axis shows productivity in the first 15 quarters of the recovery (except for the 1970-73 upturn, which didn’t last that long). For reasons unknown to me, the tick marks disappeared in the transition from Excel. Obviously this is yet another Excel spreadsheet error.
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The NYT gets the economics upside down in a piece discussing the protests in Turkey. At one point it tells readers:
“And like Spain and Greece before 2008, Turkey runs one of the largest current account deficits in the world, at around 7 percent of G.D.P. That, economists say, sets in motion a vicious circle as an overheated economy sucks in imports. That, in turn, creates a stronger currency that hurts the country’s exports, forcing Turkey to borrow ever more to finance the gap.”
Okay, so we have a large current account deficit that somehow leads to an overheated economy, that sucks in imports. That in turn creates a stronger currency.
Let’s get out the textbook. Turkey has a current account deficit primarily because the high value of its currency makes imports relatively cheap and its exports more expensive for people living in other countries. The causation is from high currency value to current account deficit.
The deficit means that Turkey is buying goods and services from other countries rather than spending it domestically. This reduces demand in Turkey, making the economy less overheated, not more.
Finally the current account deficit sends money out of the country, it increases the supply of Turkish currency on international markets. That should lower the value of Turkey’s currency, not raise it.
In this context, the recent fall in the Turkish lira that is highlighted in the article would be exactly what the doctor ordered. This would make Turkish goods more competitive internationally and reduce the size of the trade deficit.
Note: Typo corrected, thanks Bill.
The NYT gets the economics upside down in a piece discussing the protests in Turkey. At one point it tells readers:
“And like Spain and Greece before 2008, Turkey runs one of the largest current account deficits in the world, at around 7 percent of G.D.P. That, economists say, sets in motion a vicious circle as an overheated economy sucks in imports. That, in turn, creates a stronger currency that hurts the country’s exports, forcing Turkey to borrow ever more to finance the gap.”
Okay, so we have a large current account deficit that somehow leads to an overheated economy, that sucks in imports. That in turn creates a stronger currency.
Let’s get out the textbook. Turkey has a current account deficit primarily because the high value of its currency makes imports relatively cheap and its exports more expensive for people living in other countries. The causation is from high currency value to current account deficit.
The deficit means that Turkey is buying goods and services from other countries rather than spending it domestically. This reduces demand in Turkey, making the economy less overheated, not more.
Finally the current account deficit sends money out of the country, it increases the supply of Turkish currency on international markets. That should lower the value of Turkey’s currency, not raise it.
In this context, the recent fall in the Turkish lira that is highlighted in the article would be exactly what the doctor ordered. This would make Turkish goods more competitive internationally and reduce the size of the trade deficit.
Note: Typo corrected, thanks Bill.
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