NYT Does Budget Reporting the Frat Boy Way

May 26, 2013

26 Mayo 2013

Okay boys and girls, is California’s projected budget surplus of $4.4 billion bigger or smaller than Connecticut’s projected surplus of $150 million or Wisconsin’s projected surplus of $2.1 billion? I don’t mean in absolute size, I mean in importance for the states. Offhand, I couldn’t tell you, since I don’t know the size of their economies that precisely and I also don’t know whether these are figures for 1-year or 2-year budgets. (Many states have 2-year budgets.)

So why the hell does the NYT report on budget numbers this way? What information do they think they are giving readers? Couldn’t they tell their reporters to look up the state budgets and report the numbers as percentages? (California’s surplus is roughly 4.5 percent of projected spending, Connecticut’s is 0.8 percent, and Wisconsin’s is 3.0 percent.)

This is a problem with budget reporting more generally. It is standard practice to write down sums in the billions or trillions that mean almost nothing to anyone other than a small group of budget wonks. I know the NYT has very well-educated readers, but it is absurd to imagine that the vast majority have any clue what the numbers mean when they write down a five-year appropriation for transportation or 10-year projections for domestic discretionary spending. (Often the number of years covered is not even mentioned.) Most readers have so little clue about the budget that they would think the same about these numbers if a zero was added or removed.

I have raised this issue with reporters numerous times. None has tried to claim that most of their readers actually know what these numbers mean. So why do news outlets report budget numbers this way? I know it is the fraternity ritual, but I’m sorry it makes no sense. Their job is supposed to be to convey information, they are not doing so.

People do understand percentages. If the standard model was to always report budget numbers as a percent of total spending then the media would be providing information. This is supposed to be their job, not mindlessly following some ritual of budget reporting of unknown origin.

We know from polling data that the public is grossly misinformed about where their budget dollars go. It is fashionable in elite circles to laugh at people for being dumb for thinking that one-third of the budget goes to foreign aid or TANF. The laughter is much better directed at the NYT, Washington Post and NPR who have reporters who are too dumb to figure out to how to convey their subject matter in a way that is understandable to their audience.

Okay boys and girls, is California’s projected budget surplus of $4.4 billion bigger or smaller than Connecticut’s projected surplus of $150 million or Wisconsin’s projected surplus of $2.1 billion? I don’t mean in absolute size, I mean in importance for the states. Offhand, I couldn’t tell you, since I don’t know the size of their economies that precisely and I also don’t know whether these are figures for 1-year or 2-year budgets. (Many states have 2-year budgets.)

So why the hell does the NYT report on budget numbers this way? What information do they think they are giving readers? Couldn’t they tell their reporters to look up the state budgets and report the numbers as percentages? (California’s surplus is roughly 4.5 percent of projected spending, Connecticut’s is 0.8 percent, and Wisconsin’s is 3.0 percent.)

This is a problem with budget reporting more generally. It is standard practice to write down sums in the billions or trillions that mean almost nothing to anyone other than a small group of budget wonks. I know the NYT has very well-educated readers, but it is absurd to imagine that the vast majority have any clue what the numbers mean when they write down a five-year appropriation for transportation or 10-year projections for domestic discretionary spending. (Often the number of years covered is not even mentioned.) Most readers have so little clue about the budget that they would think the same about these numbers if a zero was added or removed.

I have raised this issue with reporters numerous times. None has tried to claim that most of their readers actually know what these numbers mean. So why do news outlets report budget numbers this way? I know it is the fraternity ritual, but I’m sorry it makes no sense. Their job is supposed to be to convey information, they are not doing so.

People do understand percentages. If the standard model was to always report budget numbers as a percent of total spending then the media would be providing information. This is supposed to be their job, not mindlessly following some ritual of budget reporting of unknown origin.

We know from polling data that the public is grossly misinformed about where their budget dollars go. It is fashionable in elite circles to laugh at people for being dumb for thinking that one-third of the budget goes to foreign aid or TANF. The laughter is much better directed at the NYT, Washington Post and NPR who have reporters who are too dumb to figure out to how to convey their subject matter in a way that is understandable to their audience.

Why Aren't We Hearing Stories About Doctor Shortages in the Immigration Debate?

By Dean BakerDean Baker

May 24, 2013

24 Mayo 2013

That’s what readers of Uwe Reinhardt’s blog post on doctor’s pay are probably asking. Reinhart shows the pay for doctors by specialty, which makes everyone look pretty well paid in my book. The median in several of the higher paying specialties is over $500,000 a year. Even the median family care physician pockets almost 14 times as much as a minimum wage worker at $208,700 a year.

Reinhardt then tells us that the situation is more ambiguous if we look at the dispersion. I must be looking at different numbers. (Actually, I am looking at different numbers. The medians shown in the chart giving dispersion are somewhat higher than in the chart that just shows the medians. The median family care physician earned $219,400 in this chart.) Anyhow, the dispersion is less than I might have naively expected. Reinhardt’s chart shows that 80 percent of family practitioners make more than $174,900 a year (@12 minimum wage workers). It shows us that 80 percent of orthopedic surgeons make more than $400,000 a year.

Reinhardt tells us that doctors’ return on their investment in education is not especially high when we compare it to pay on Wall Street. Why isn’t Wall Street pay on the table when it comes to talking about the pay of public sector workers or domestic care workers? The fact that we have a grossly bloated and inefficient financial sector should not be an excuse for excessive pay to high end workers elsewhere.

There are hundreds of thousands, or more likely millions, of workers in the developing world who would be delighted to train to U.S. standards and work for half of U.S. wages. We don’t let them in because doctors have much more power than the STEM workers fighting against Microsoft and Google over the number of H1B equivalent visas.

If economists were honest, the question on doctors would be a no-brainer. Open the doors, everyone will gain but the doctors. But honest economists, oh well.

That’s what readers of Uwe Reinhardt’s blog post on doctor’s pay are probably asking. Reinhart shows the pay for doctors by specialty, which makes everyone look pretty well paid in my book. The median in several of the higher paying specialties is over $500,000 a year. Even the median family care physician pockets almost 14 times as much as a minimum wage worker at $208,700 a year.

Reinhardt then tells us that the situation is more ambiguous if we look at the dispersion. I must be looking at different numbers. (Actually, I am looking at different numbers. The medians shown in the chart giving dispersion are somewhat higher than in the chart that just shows the medians. The median family care physician earned $219,400 in this chart.) Anyhow, the dispersion is less than I might have naively expected. Reinhardt’s chart shows that 80 percent of family practitioners make more than $174,900 a year (@12 minimum wage workers). It shows us that 80 percent of orthopedic surgeons make more than $400,000 a year.

Reinhardt tells us that doctors’ return on their investment in education is not especially high when we compare it to pay on Wall Street. Why isn’t Wall Street pay on the table when it comes to talking about the pay of public sector workers or domestic care workers? The fact that we have a grossly bloated and inefficient financial sector should not be an excuse for excessive pay to high end workers elsewhere.

There are hundreds of thousands, or more likely millions, of workers in the developing world who would be delighted to train to U.S. standards and work for half of U.S. wages. We don’t let them in because doctors have much more power than the STEM workers fighting against Microsoft and Google over the number of H1B equivalent visas.

If economists were honest, the question on doctors would be a no-brainer. Open the doors, everyone will gain but the doctors. But honest economists, oh well.

I'm Back!!!

By Dean BakerDean Baker

May 24, 2013

24 Mayo 2013

I’m tan, rested, and ready! No, I have not been reincarnated as Dick Nixon (I actually am not especially tan), but I am back and looking to get lots done. Vacations are good. Thanks for all the kind words.

It's a "Trade" Pact not "Free-Trade" Pact

By Dean BakerDean Baker

May 24, 2013

24 Mayo 2013

I’ve always been told that newspapers are pressed for space and like to eliminate any unnecessary wording. Why then do they insist on calling trade pacts, like the proposed deal between the European Union and the United States “free-trade” pacts? I found the phrase “free-trade” three times in my reading of this NYT article on the European Parliament’s efforts to limit the scope of a deal.

As the discussion makes clear most of the issues raised in the discussion have little to do with tariffs or quotas, the items that usually hold center place in free trade. Rather, the pact has to do with a range of regulatory issues, in many cases seeking to impose rules that might not pass muster if they had to go through the conventional political process.

These regulatory rules have nothing to do with free trade. For example, the United States is likely to push for stronger patent and copyright protections, the opposite of free trade. Apparently the Obama administration is also intending to use the pact to derail an EU effort to impose a financial transactions tax on banks, according to the article. Again, this has zero to do with free trade, it is about protecting big banks from the same sort of taxation imposed on other industries.

So, the question is, why does the NYT feel the need to use the term “free-trade” in this piece? What information has it provided readers that they would be missing if it just referred to the deal as a “trade” pact?

I’ve always been told that newspapers are pressed for space and like to eliminate any unnecessary wording. Why then do they insist on calling trade pacts, like the proposed deal between the European Union and the United States “free-trade” pacts? I found the phrase “free-trade” three times in my reading of this NYT article on the European Parliament’s efforts to limit the scope of a deal.

As the discussion makes clear most of the issues raised in the discussion have little to do with tariffs or quotas, the items that usually hold center place in free trade. Rather, the pact has to do with a range of regulatory issues, in many cases seeking to impose rules that might not pass muster if they had to go through the conventional political process.

These regulatory rules have nothing to do with free trade. For example, the United States is likely to push for stronger patent and copyright protections, the opposite of free trade. Apparently the Obama administration is also intending to use the pact to derail an EU effort to impose a financial transactions tax on banks, according to the article. Again, this has zero to do with free trade, it is about protecting big banks from the same sort of taxation imposed on other industries.

So, the question is, why does the NYT feel the need to use the term “free-trade” in this piece? What information has it provided readers that they would be missing if it just referred to the deal as a “trade” pact?

• Affordable Care Act

Obamacare Is Creating Uncertainty! Better Ditch It

By Dean BakerDean Baker

May 24, 2013

24 Mayo 2013

As the January 1, 2014 date, when the main body of President Obama's health care plan takes effect, comes closer Republicans are getting ever more frantic. After all, the risk to the country is enormous. The program will extend health care insurance to tens of millions of people and provide real security to tens of millions more (suppose you get sick now and lose the job that provides you insurance). Now that is really scary. People may like the plan and actually look to extend it and improve it in various ways that could mean lower incomes for insurers, doctors, and other providers. This is why the Republicans are pulling out all the stops to sink the plan now before it's too late. Robert Samuelson carries the torch today in his column "the fog of Obamacare," the point of which is that it is all so confusing. As evidence he cites polls showing that people don't know what the main provisions of the bill are or when they take effect or even if the bill was passed into law. Yes, that is bad news. It probably didn't help matters in this area that we had many Republicans talking about death panels or that the government was going to take over the health care system. Unfortunately the public is often less informed that many of us might like. They think that welfare and foreign aid are among the largest items in the federal budget. Many also thought that Saddam Hussein was behind the September 11th attacks. In other areas Samuelson has not been especially concerned about public ignorance. But Samuelson tells us that employers are also confused about their responsibilities. He knows this because he talked to the heads of four employer consulting companies. He tells readers that many of these companies "are only now coming to grips with the ACA, because they’d assumed that the Supreme Court would invalidate it or that a Republican White House would repeal it." So employers rely on consultants who had not paid attention to the ACA because they thought the Supreme Court would repeal it or that Romney would win the election? Now that is scary.

There Are No More Bangladeshes

By Dean BakerDean Baker

May 16, 2013

16 Mayo 2013

In the aftermath of the horrific factory fire in Bangladesh leading to over 1100 deaths, there have been renewed demands for serious safety standards at the clothing factories there. These demands have been met by the standard response from industry spokespeople that higher costs will simply cost jobs since firms will relocate to lower cost countries.

Adam Davidson has a piece in the NYT magazine this weekend that makes the simple point: there are no more Bangladeshes. The threat of relocation was a realistic concern when companies could move to the south of the United States, to Latin America, to China, or Vietnam, but this threat no longer exists. All of these regions/countries have seen sufficient rise in living standards and wages that they do not provide credible alternatives to companies seeking to escape higher labor costs in Bangladesh. There are no obvious locations where companies can now look to relocate to escape higher costs in Bangladesh.

This means that if companies have to pay a few pennies more per t-shirt to provide safe working conditions in Bangladesh they will just have to live with the higher cost. That means slightly lower profit for the manufacturer and an almost invisible price increase for t-shirt buyers in rich countries.

In the aftermath of the horrific factory fire in Bangladesh leading to over 1100 deaths, there have been renewed demands for serious safety standards at the clothing factories there. These demands have been met by the standard response from industry spokespeople that higher costs will simply cost jobs since firms will relocate to lower cost countries.

Adam Davidson has a piece in the NYT magazine this weekend that makes the simple point: there are no more Bangladeshes. The threat of relocation was a realistic concern when companies could move to the south of the United States, to Latin America, to China, or Vietnam, but this threat no longer exists. All of these regions/countries have seen sufficient rise in living standards and wages that they do not provide credible alternatives to companies seeking to escape higher labor costs in Bangladesh. There are no obvious locations where companies can now look to relocate to escape higher costs in Bangladesh.

This means that if companies have to pay a few pennies more per t-shirt to provide safe working conditions in Bangladesh they will just have to live with the higher cost. That means slightly lower profit for the manufacturer and an almost invisible price increase for t-shirt buyers in rich countries.

How Much Money Do You Need to Get an Op-ed in the Washington Post?

By Dean BakerDean Baker

May 16, 2013

16 Mayo 2013

That’s what readers of Jim Roumell’s column on wealth-testing Social Security must be asking. The column, “the rich can save Social Security by giving up their checks,” gets almost all its facts wrong, and suffers from huge problems of logic.

The basic idea is that we have some very rich people who don’t need Social Security, therefore there shouldn’t get it. Of course these people did pay for their Social Security. While Roumell is certainly right that the very rich don’t need the money, they generally wouldn’t need the interest on the government bonds they own. We could also deny them the interest on these bonds, that would make as much sense as Roumell’s proposal on Social Security, but let’s not get bogged down in such moral considerations.

Roumell sees large savings if we deny Social Security to the rich:

“According to the Wall Street Journal, the top 1 percent of the United States’ 115?million households have a net worth of $6.8?million or greater. The top 5?percent have a net worth of $1.9 million or greater. If just the top 1 percent of wealthiest households gave up their Social Security income, assuming two-thirds of these households are of retirement age and will receive benefits averaging $30,000 a year, more than $200?billion would be saved in the first 10 years. That would contribute greatly to resolving the projected funding gap. If Social Security is gradually phased out for the wealthiest 5 percent of households, beginning with just a 10 percent benefit reduction, the savings climbs to nearly $500 billion over 10 years.”

Let’s see, two-thirds of the top 1.0 percent are over age 65? Where exactly did Roumell get this one? Has the Washington Post heard of fact checking?

If we eliminate Social Security for the wealthiest 5 percent, then we would be eliminating benefits for household with incomes of around $80,000 in their retirement. That’s a new definition of “rich.” It was $400,000 a year when we talked about small increases in tax rates.

But the best part of the story is trying to envision what Roumell’s wealth test even would look like. People tend to accumulate wealth during their working lifetime and spend it down as they approach retirement. How do we monitor people’s wealth? Do we do annual assessments of the value of their stock portfolios, their home and vacation properties, personal items like expensive paintings and jewelry? Then if they cross the magic $1.9 million threshold at any point in their lives we put a permanent hold on their Social Security benefits?

The long and short is that Roumell’s proposal is completely unworkable as anyone who has given it a moment’s thought would recognize. But hey, he wants to go after Social Security and he has a lot of money, why not give him a column in the Washington Post?