I wish I could take credit for making this one up.
I wish I could take credit for making this one up.
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Okay, that’s not exactly what he did, but he did devote a NYT column to tell readers about the business started by his daughter’s college roommate. He claimed that this business shows how the labor market is changing. He produced literally no evidence whatsoever to support this claim.
The article tells readers:
“Underneath the huge drop in demand that drove unemployment up to 9 percent during the recession, there’s been an important shift in the education-to-work model in America. Anyone who’s been looking for a job knows what I mean. It is best summed up by the mantra from the Harvard education expert Tony Wagner that the world doesn’t care anymore what you know; all it cares ‘is what you can do with what you know.'”
And we know about the big changes in the labor market because of the start-up started by the roommate of Thomas Friedman’s daughter that is designed to test workers to match them for jobs. According to Friedman, the company has about 50,000 registered job-seekers. He also tells us that they receive an average of 500 applications for every job opening. If we assume that job-seekers submit an average of 100 to 200 applications then this start-up would have between 10,000 and 20,000 job listings.
According to the Labor Department there are over 4.2 million hires every month or roughly 50 million over the course of a year. That means that this start-up’s listing account for somewhere between 0.02 percent and 0.04 percent of job openings. Perhaps we should wait a little while before declaring that the shape of the labor has changed.
Okay, that’s not exactly what he did, but he did devote a NYT column to tell readers about the business started by his daughter’s college roommate. He claimed that this business shows how the labor market is changing. He produced literally no evidence whatsoever to support this claim.
The article tells readers:
“Underneath the huge drop in demand that drove unemployment up to 9 percent during the recession, there’s been an important shift in the education-to-work model in America. Anyone who’s been looking for a job knows what I mean. It is best summed up by the mantra from the Harvard education expert Tony Wagner that the world doesn’t care anymore what you know; all it cares ‘is what you can do with what you know.'”
And we know about the big changes in the labor market because of the start-up started by the roommate of Thomas Friedman’s daughter that is designed to test workers to match them for jobs. According to Friedman, the company has about 50,000 registered job-seekers. He also tells us that they receive an average of 500 applications for every job opening. If we assume that job-seekers submit an average of 100 to 200 applications then this start-up would have between 10,000 and 20,000 job listings.
According to the Labor Department there are over 4.2 million hires every month or roughly 50 million over the course of a year. That means that this start-up’s listing account for somewhere between 0.02 percent and 0.04 percent of job openings. Perhaps we should wait a little while before declaring that the shape of the labor has changed.
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I have had several people send me this George Packer article in the New Yorker on the political and social attitudes of the Silicon Valley millionaires and billionaires. While the piece makes for entertaining reading, it is difficult to see it as any great expose.
The piece basically shows that Silicon Valley fast lane is filled with self-absorbed twits who don’t have a clue about what the rest of the country looks like. So?
Seriously, who did we think was making big bucks in high tech, great philanthropists? As a general rule it is reasonable to assume that people who make lots of money in any industry, whether it finance, manufacturing, entertainment, or anything else, are primarily concerned with making money in that industry. I don’t know whether we should blame them for that fact, but we certainly should blame policy types who then imagine that these people’s success at money making gives them great insight into how we should run society.
Bill Gates got incredibly rich because he has sharp elbows and perhaps was willing to bend the law more than his competitors. The same applies to Mark Zuckerberg. That doesn’t mean that both are not smart and hard working people, but it does mean that they may not be the best people to determine our education policy or how best to lift the world’s poor out of poverty. Their money may give them considerable voice in these areas, but there is no reason to assume that their insights are any better than those of the latest Powerball winner.
I have had several people send me this George Packer article in the New Yorker on the political and social attitudes of the Silicon Valley millionaires and billionaires. While the piece makes for entertaining reading, it is difficult to see it as any great expose.
The piece basically shows that Silicon Valley fast lane is filled with self-absorbed twits who don’t have a clue about what the rest of the country looks like. So?
Seriously, who did we think was making big bucks in high tech, great philanthropists? As a general rule it is reasonable to assume that people who make lots of money in any industry, whether it finance, manufacturing, entertainment, or anything else, are primarily concerned with making money in that industry. I don’t know whether we should blame them for that fact, but we certainly should blame policy types who then imagine that these people’s success at money making gives them great insight into how we should run society.
Bill Gates got incredibly rich because he has sharp elbows and perhaps was willing to bend the law more than his competitors. The same applies to Mark Zuckerberg. That doesn’t mean that both are not smart and hard working people, but it does mean that they may not be the best people to determine our education policy or how best to lift the world’s poor out of poverty. Their money may give them considerable voice in these areas, but there is no reason to assume that their insights are any better than those of the latest Powerball winner.
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Since folks seem to have difficulty understanding how assets can be relevant to the Reinhart-Rogoff debt kills growth story, I will give a concrete example. Brad Plumer had a piece this weekend in the Post that discussed the potential of a carbon tax to slow greenhouse gas emissions and raise revenue. He presents estimates that a $20 a ton tax would raise $1.2 trillion over the next decade.
Okay, at this point everyone should have heard of the idea of selling emissions permits as being roughly equivalent to a tax in terms of raising revenue and discouraging emissions. Suppose that we decided tomorrow to auction off permits that were issued in a number that was intended for carbon to be priced at $20 a ton. This should raise $1.2 trillion for the government, an amount equal to 7.5 percent of GDP. (I’m ignoring discounting to keep this simple, I’m trying to make a point. If we need more money we can make the permits good for 20 years.)
If we had crossed the Reinhart-Rogoff danger line of 90 percent, say with a debt-to-GDP ratio of 95 percent, this sale of permits would push us safely under the threshold with a debt-to-GDP ratio of 87.5 percent. If the Reinhart-Rogoff 90 percent cliff was real, how could anyone be opposed to this policy?
It would increase annual growth by something like 1.0 percentage point, while helping to save the planet. The cumulative gain to GDP would be somewhere in the neighborhood of $8 trillion or more than $100,000 in additional output for an average family of four.
The United States has many other carbon permit sale option type policies available. If we believed in the Reinhart-Rogoff cliff, these would be the obvious answer as these asset sales would provide incredible growth dividends.
I’m not personally advocating such asset sales because I don’t take the Reinhart-Rogoff cliff seriously. But any honest economist who does believe in the RR cliff should be highly vocal proponents of asset sales. (They are much easier politically than cutting Social Security and Medicare.)
So here’s the perfect lie detector test for economists arguing the RR case. Are they pushing large scale asset sales?
Since folks seem to have difficulty understanding how assets can be relevant to the Reinhart-Rogoff debt kills growth story, I will give a concrete example. Brad Plumer had a piece this weekend in the Post that discussed the potential of a carbon tax to slow greenhouse gas emissions and raise revenue. He presents estimates that a $20 a ton tax would raise $1.2 trillion over the next decade.
Okay, at this point everyone should have heard of the idea of selling emissions permits as being roughly equivalent to a tax in terms of raising revenue and discouraging emissions. Suppose that we decided tomorrow to auction off permits that were issued in a number that was intended for carbon to be priced at $20 a ton. This should raise $1.2 trillion for the government, an amount equal to 7.5 percent of GDP. (I’m ignoring discounting to keep this simple, I’m trying to make a point. If we need more money we can make the permits good for 20 years.)
If we had crossed the Reinhart-Rogoff danger line of 90 percent, say with a debt-to-GDP ratio of 95 percent, this sale of permits would push us safely under the threshold with a debt-to-GDP ratio of 87.5 percent. If the Reinhart-Rogoff 90 percent cliff was real, how could anyone be opposed to this policy?
It would increase annual growth by something like 1.0 percentage point, while helping to save the planet. The cumulative gain to GDP would be somewhere in the neighborhood of $8 trillion or more than $100,000 in additional output for an average family of four.
The United States has many other carbon permit sale option type policies available. If we believed in the Reinhart-Rogoff cliff, these would be the obvious answer as these asset sales would provide incredible growth dividends.
I’m not personally advocating such asset sales because I don’t take the Reinhart-Rogoff cliff seriously. But any honest economist who does believe in the RR cliff should be highly vocal proponents of asset sales. (They are much easier politically than cutting Social Security and Medicare.)
So here’s the perfect lie detector test for economists arguing the RR case. Are they pushing large scale asset sales?
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My friend Jared Bernstein rightly points out that blocking the Keystone pipeline will not keep the tar sands oil in the ground. There are other ways to bring the oil to market and the industry will undoubtedly pursue these channels if opponents of the pipeline are successful.
But there is an important point here. These other methods of getting the oil to consumers are more expensive. We know this because the industry would not be pushing the pipeline if it was not the lowest cost way to get the oil to the market.
In this way opposition to the pipeline is effectively raising the cost of tar sands oil. That is exactly what we should want to see. In a sane world we would have a carbon tax, which would discourage the use of oil in general and in particular oil that was associated with large amounts of carbon emissions.
For political reasons, a carbon tax seems a non-starter at the moment. With the failure of Washington to act responsibly, the Keystone protesters are effectively imposing their own carbon tax on tar sands oil by raising its price. It’s far from perfect, but it’s certainly a reasonable course of action under the circumstances.
My friend Jared Bernstein rightly points out that blocking the Keystone pipeline will not keep the tar sands oil in the ground. There are other ways to bring the oil to market and the industry will undoubtedly pursue these channels if opponents of the pipeline are successful.
But there is an important point here. These other methods of getting the oil to consumers are more expensive. We know this because the industry would not be pushing the pipeline if it was not the lowest cost way to get the oil to the market.
In this way opposition to the pipeline is effectively raising the cost of tar sands oil. That is exactly what we should want to see. In a sane world we would have a carbon tax, which would discourage the use of oil in general and in particular oil that was associated with large amounts of carbon emissions.
For political reasons, a carbon tax seems a non-starter at the moment. With the failure of Washington to act responsibly, the Keystone protesters are effectively imposing their own carbon tax on tar sands oil by raising its price. It’s far from perfect, but it’s certainly a reasonable course of action under the circumstances.
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The NYT had a piece noting that as a result of political gridlock Congress has not fixed a number of glitches in the Affordable Care Act. While the piece does mention several items that are in fact glitches, it also includes a number of issues that are simply lobbying to benefit special interests.
For example, it correctly notes that the provision setting 30 hours a week of work as a cutoff for requiring employers to provide insurance or pay a penalty was a glitch, however it absurdly follows industry groups in implying that raising the numbers to 35 hours or 40 would fix it. Of course the problem is that it is a discrete number of hours rather than a pro-rated payment. Wherever the cutoff is placed there will be a strong incentive for firms to cluster hours just below it, unless the number is put high enough so that almost no employees would cross it in any case.
The article includes a death panel type assertion. The article begins by citing Scott DeFife, a restaurant industry lobbyist, warning of a trainwreck from the law. A few paragraphs later it quotes him:
“Are we really going to put the private sector in a situation where there’s a real potential mess for posturing points?”
The piece never describes the potential mess that Mr. DeFife is concerned about. Needless to say, the bill will create inconveniences for many businesses as does the current health care system. There is no evidence presented in the piece that the law would risk major damage to businesses, we just have the NYT taking empty assertions from an industry lobbyist at face value.
The NYT had a piece noting that as a result of political gridlock Congress has not fixed a number of glitches in the Affordable Care Act. While the piece does mention several items that are in fact glitches, it also includes a number of issues that are simply lobbying to benefit special interests.
For example, it correctly notes that the provision setting 30 hours a week of work as a cutoff for requiring employers to provide insurance or pay a penalty was a glitch, however it absurdly follows industry groups in implying that raising the numbers to 35 hours or 40 would fix it. Of course the problem is that it is a discrete number of hours rather than a pro-rated payment. Wherever the cutoff is placed there will be a strong incentive for firms to cluster hours just below it, unless the number is put high enough so that almost no employees would cross it in any case.
The article includes a death panel type assertion. The article begins by citing Scott DeFife, a restaurant industry lobbyist, warning of a trainwreck from the law. A few paragraphs later it quotes him:
“Are we really going to put the private sector in a situation where there’s a real potential mess for posturing points?”
The piece never describes the potential mess that Mr. DeFife is concerned about. Needless to say, the bill will create inconveniences for many businesses as does the current health care system. There is no evidence presented in the piece that the law would risk major damage to businesses, we just have the NYT taking empty assertions from an industry lobbyist at face value.
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The mainstream of the economics profession continue to try to rescue Carmen Reinhart and Ken Rogoff (R&R) from the consequences of their famous Excel spreadsheet error. The latest is Michael Heller, who has pronounced Paul Krugman the loser in his exchanges with R&R because he conceded that countries with debt-to-GDP ratios that exceed 90 percent of GDP have slower growth.
This is the sort of piece that should really have the general public thinking about defunding economics programs everywhere. The fact that countries with higher debt-to-GDP ratios have slower growth than countries with lower debt-to-GDP ratios was never at issue. The corrected spreadsheet shows this to be true across the board at every debt level. There is no importance to 90 percent.
The 90 percent cliff came about because of the Excel spreadsheet error, it does not otherwise exist in the data. Heller’s claim that R&R never said anything about a 90 percent cliff is an effort to re-write history. This number was embedded in the Bowles-Simpson report that came to be the guidepost for debate on the deficit in Washington policy circles. It also has been used by top officials in the European Union and elsewhere as a basis for austerity.
Using the corrected data the closest thing resembling a cliff can be found in the range of debt-to-GDP ratios of 20 percent of GDP. There would be no reason that 90 percent would ever appear in a discussion of debt in the corrected R&R debt-to-GDP data.
Also, as Krugman and others have repeatedly pointed out, the correlations in R&R tell us nothing about causation. There are lots of sick people at hospitals. Would we not have sick people if we shut our hospitals?
The efforts to examine causation have found the direction is overwhelmingly from slow growth to debt, not the other way around. And of course there is the issue that debt is only half of a balance sheet. If there really was a sharp growth penalty due to crossing some debt-to-GDP barrier then the logical policy response would be to sell some asset(s) to get back below the magic bar. That would surely beat a decade of high unemployment due to austerity. Unfortunately, balance sheets are apparently too difficult a concept for most economists.
Anyhow, if Heller can read Krugman’s latest column and declare R&R the winner, he must also believe that George Foreman defeated Muhammed Ali back in Rumble in the Jungle back in 1975. Such is the state of the economics profession.
The mainstream of the economics profession continue to try to rescue Carmen Reinhart and Ken Rogoff (R&R) from the consequences of their famous Excel spreadsheet error. The latest is Michael Heller, who has pronounced Paul Krugman the loser in his exchanges with R&R because he conceded that countries with debt-to-GDP ratios that exceed 90 percent of GDP have slower growth.
This is the sort of piece that should really have the general public thinking about defunding economics programs everywhere. The fact that countries with higher debt-to-GDP ratios have slower growth than countries with lower debt-to-GDP ratios was never at issue. The corrected spreadsheet shows this to be true across the board at every debt level. There is no importance to 90 percent.
The 90 percent cliff came about because of the Excel spreadsheet error, it does not otherwise exist in the data. Heller’s claim that R&R never said anything about a 90 percent cliff is an effort to re-write history. This number was embedded in the Bowles-Simpson report that came to be the guidepost for debate on the deficit in Washington policy circles. It also has been used by top officials in the European Union and elsewhere as a basis for austerity.
Using the corrected data the closest thing resembling a cliff can be found in the range of debt-to-GDP ratios of 20 percent of GDP. There would be no reason that 90 percent would ever appear in a discussion of debt in the corrected R&R debt-to-GDP data.
Also, as Krugman and others have repeatedly pointed out, the correlations in R&R tell us nothing about causation. There are lots of sick people at hospitals. Would we not have sick people if we shut our hospitals?
The efforts to examine causation have found the direction is overwhelmingly from slow growth to debt, not the other way around. And of course there is the issue that debt is only half of a balance sheet. If there really was a sharp growth penalty due to crossing some debt-to-GDP barrier then the logical policy response would be to sell some asset(s) to get back below the magic bar. That would surely beat a decade of high unemployment due to austerity. Unfortunately, balance sheets are apparently too difficult a concept for most economists.
Anyhow, if Heller can read Krugman’s latest column and declare R&R the winner, he must also believe that George Foreman defeated Muhammed Ali back in Rumble in the Jungle back in 1975. Such is the state of the economics profession.
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