In an article on the recent pick up of growth in Japan the Post told readers that Japan’s government plans a sales tax increase next year:
“The tax increases are needed to cope with a growing public debt that already is more than twice the size of Japan’s economy.”
In spite of having a very high debt-to-GDP ratio, Japan’s interest payments are less than 1.0 percent of GDP. This is due to the fact that interest rates are extraordinarily low. If there is some importance to having a lower debt to GDP ratio, then Japan can simply repurchase long-term bonds at sharp discounts when interest rates rise, as is generally projected. That would be a costless way to reduce the debt to GDP ratio.
In an article on the recent pick up of growth in Japan the Post told readers that Japan’s government plans a sales tax increase next year:
“The tax increases are needed to cope with a growing public debt that already is more than twice the size of Japan’s economy.”
In spite of having a very high debt-to-GDP ratio, Japan’s interest payments are less than 1.0 percent of GDP. This is due to the fact that interest rates are extraordinarily low. If there is some importance to having a lower debt to GDP ratio, then Japan can simply repurchase long-term bonds at sharp discounts when interest rates rise, as is generally projected. That would be a costless way to reduce the debt to GDP ratio.
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Not all readers would necessarily have this fact in their head when they see the Post telling them:
“China remains the largest contributor of carbon dioxide into the atmosphere, with about a quarter of global emissions.”
On a per person basis, the United States swamps China in terms of emissions. If there is any country that people concerned about global warming should be angry at, the United States would top the list by a long shot.
Not all readers would necessarily have this fact in their head when they see the Post telling them:
“China remains the largest contributor of carbon dioxide into the atmosphere, with about a quarter of global emissions.”
On a per person basis, the United States swamps China in terms of emissions. If there is any country that people concerned about global warming should be angry at, the United States would top the list by a long shot.
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What other possible interpretation could anyone give to S&P’s downgrade of U.S. government debt two years ago? The question that S&P is supposed to answer with its rating is whether bonds will be paid off as scheduled. The United States issues debt denominated in dollars, which it has the ability to print in whatever number it desires. Therefore the downgrade can only have been taken to mean an increased probability that the country would forget how to print dollars.
It would be good to point this fact out in news articles that report on the rating agencies’ plans to reverse this downgrade. Otherwise readers might be led to believe that S&P assessments are actually based on the risk that the United States will default on its debt.
What other possible interpretation could anyone give to S&P’s downgrade of U.S. government debt two years ago? The question that S&P is supposed to answer with its rating is whether bonds will be paid off as scheduled. The United States issues debt denominated in dollars, which it has the ability to print in whatever number it desires. Therefore the downgrade can only have been taken to mean an increased probability that the country would forget how to print dollars.
It would be good to point this fact out in news articles that report on the rating agencies’ plans to reverse this downgrade. Otherwise readers might be led to believe that S&P assessments are actually based on the risk that the United States will default on its debt.
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Bruce Bartlett has a nice column showing both the explosion in the size of the financial sector and the evidence that it has become both a major drag on economic growth and generator of inequality over the last three decades. That would seem to be a pretty good argument for a financial transactions tax like the one they have had on stock trades in the UK for the last three centuries. Of course this sort of tax on the sector faces an uphill battle in Washington because, in addition to being a major drag on economic growth and generator of inequality, the financial sector is also a major source of campaign contributions.
Bruce Bartlett has a nice column showing both the explosion in the size of the financial sector and the evidence that it has become both a major drag on economic growth and generator of inequality over the last three decades. That would seem to be a pretty good argument for a financial transactions tax like the one they have had on stock trades in the UK for the last three centuries. Of course this sort of tax on the sector faces an uphill battle in Washington because, in addition to being a major drag on economic growth and generator of inequality, the financial sector is also a major source of campaign contributions.
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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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