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Okay, I’m stealing from Paul Krugman today. Brooks’ column today points out that modest redistributional measures implemented by Obama don’t amount to a hill of beans next to the enormous upward redistribution going on in before-tax income. The restoration of Clinton era tax rates at best take away 2-3 years of growing inequality of before tax income.
Where Brooks is out to lunch is when he tells readers:
“On the one side, there is the meritocracy, which widens inequality.”
That one is more than a few million miles far of the mark. When Erskine Bowles earned $340k as a director of Morgan Stanley as it was pursuing practices that would have landed it in bankruptcy had it not been saved by a government bailout, was that due to meritocracy? Did all the CEOs who got tens of millions of dollars in compensation as they tanked their companies get their pay due to meritocracy? Is the reason that our doctors get twice as much as doctors in Western Europe meritocracy?
The list here is very long, yes it’s my book about Loser Liberalism, but you have to be pretty blind to realities in the United States today to think that the story of inequality is primarily about meritocracy — although it might be useful for some people to think this.
Okay, I’m stealing from Paul Krugman today. Brooks’ column today points out that modest redistributional measures implemented by Obama don’t amount to a hill of beans next to the enormous upward redistribution going on in before-tax income. The restoration of Clinton era tax rates at best take away 2-3 years of growing inequality of before tax income.
Where Brooks is out to lunch is when he tells readers:
“On the one side, there is the meritocracy, which widens inequality.”
That one is more than a few million miles far of the mark. When Erskine Bowles earned $340k as a director of Morgan Stanley as it was pursuing practices that would have landed it in bankruptcy had it not been saved by a government bailout, was that due to meritocracy? Did all the CEOs who got tens of millions of dollars in compensation as they tanked their companies get their pay due to meritocracy? Is the reason that our doctors get twice as much as doctors in Western Europe meritocracy?
The list here is very long, yes it’s my book about Loser Liberalism, but you have to be pretty blind to realities in the United States today to think that the story of inequality is primarily about meritocracy — although it might be useful for some people to think this.
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A NYT article on the Republicans’ latest plans in upcoming budget debates told readers:
“Republicans have made clear that they are willing to let the government shut down at that time to force deep spending cuts or changes to Medicare and Social Security that would bring down deficits in the long run.”
The Republicans are interested in cutting these programs, that is how their plans would bring down deficits. While a “cut” can be termed a change, in the same way that a punch to a person’s head can be described as a “change” in their circumstances, this is not the way such actions would typically be described.
It is understandable that the Republicans would prefer to use euphemisms to describe their plans for these very popular programs. However newspapers are supposed to try to convey information to readers. It is not their job to try to advance the agenda of a political party.
A NYT article on the Republicans’ latest plans in upcoming budget debates told readers:
“Republicans have made clear that they are willing to let the government shut down at that time to force deep spending cuts or changes to Medicare and Social Security that would bring down deficits in the long run.”
The Republicans are interested in cutting these programs, that is how their plans would bring down deficits. While a “cut” can be termed a change, in the same way that a punch to a person’s head can be described as a “change” in their circumstances, this is not the way such actions would typically be described.
It is understandable that the Republicans would prefer to use euphemisms to describe their plans for these very popular programs. However newspapers are supposed to try to convey information to readers. It is not their job to try to advance the agenda of a political party.
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I didn’t have a clue and I suspect that 99 percent of other NYT readers also didn’t have a clue. This raises the question of why did the NYT use this number, referring to the size of the income tax cuts being proposed by Kansas Governor Sam Brownback, without any context?
Kansas 2013 budget was $13.4 billion, making the proposed tax cut equal to 6.3 percent of last year’s budget. Most NYT readers would have a reasonably good sense of the meaning of 6.3 percent.
I didn’t have a clue and I suspect that 99 percent of other NYT readers also didn’t have a clue. This raises the question of why did the NYT use this number, referring to the size of the income tax cuts being proposed by Kansas Governor Sam Brownback, without any context?
Kansas 2013 budget was $13.4 billion, making the proposed tax cut equal to 6.3 percent of last year’s budget. Most NYT readers would have a reasonably good sense of the meaning of 6.3 percent.
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Yes, we have a mismatch of jobs and skills. The problem is that it seems to be on the side of the managers who can’t seem to figure out how to get good help. An excellent review of Peter Cappelli’s new book by Trey Popp.
Yes, we have a mismatch of jobs and skills. The problem is that it seems to be on the side of the managers who can’t seem to figure out how to get good help. An excellent review of Peter Cappelli’s new book by Trey Popp.
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Deficits throughout the euro zone were relatively modest prior to the economic collapse in 2008 according to data from the IMF. In fact, some euro zone countries, like Spain and Ireland, were even running budget surpluses. This didn’t stop Reuters from telling readers in the first line of an article picked up by the NYT:
“Public debt levels in the euro zone neared their projected peak last year after more than a decade of huge borrowing.”
This is seriously misleading since it implies that large deficits were a longstanding problem as opposed to an outgrowth of the economic crisis.
Deficits throughout the euro zone were relatively modest prior to the economic collapse in 2008 according to data from the IMF. In fact, some euro zone countries, like Spain and Ireland, were even running budget surpluses. This didn’t stop Reuters from telling readers in the first line of an article picked up by the NYT:
“Public debt levels in the euro zone neared their projected peak last year after more than a decade of huge borrowing.”
This is seriously misleading since it implies that large deficits were a longstanding problem as opposed to an outgrowth of the economic crisis.
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There were numerous news stories and columns touting the liberal agenda that President Obama put forward in his second inaugural address yesterday (e.g. here and here). While the speech certainly hit on several issues that have historically been important to liberals, the failure to mention full employment was a major omission.
The fact that the economy is still more than 9 million jobs below its trend growth path implies enormous suffering. Not only are millions of people unnecessarily unemployed or underemployed, high levels of unemployment mean that most workers lack bargaining power. As a result they are unable to raise their wages and get their share of productivity growth. This means that income is likely to continue to be redistributed upward.
There are not easy political paths to full employment at this point. Government stimulus (i.e. larger deficits) is the most obvious path, but that seems out of the question in a context where deficit reduction is dominating the policy debate. If the dollar dropped, it would make U.S. goods more competitive, thereby increasing net exports, but Obama has made little commitment in this direction and the process would take time in any case.
The best prospect is probably increased use of worksharing. Germany has used worksharing to lower its unemployment rate by more than 2 percentage points below its pre-recession level, even though its growth has been no better than growth in the United States. Worksharing does enjoy bipartisan support in the United States and is an option in the unemployment insurance systems in 25 states, but the takeup rate has been extremely low. It’s possible that a major presidential push could substantially increase the use of worksharing.
Anyhow, it is striking that a speech that touched on many liberal themes did not make a commitment to full employment. This should have been noted in the coverage.
There were numerous news stories and columns touting the liberal agenda that President Obama put forward in his second inaugural address yesterday (e.g. here and here). While the speech certainly hit on several issues that have historically been important to liberals, the failure to mention full employment was a major omission.
The fact that the economy is still more than 9 million jobs below its trend growth path implies enormous suffering. Not only are millions of people unnecessarily unemployed or underemployed, high levels of unemployment mean that most workers lack bargaining power. As a result they are unable to raise their wages and get their share of productivity growth. This means that income is likely to continue to be redistributed upward.
There are not easy political paths to full employment at this point. Government stimulus (i.e. larger deficits) is the most obvious path, but that seems out of the question in a context where deficit reduction is dominating the policy debate. If the dollar dropped, it would make U.S. goods more competitive, thereby increasing net exports, but Obama has made little commitment in this direction and the process would take time in any case.
The best prospect is probably increased use of worksharing. Germany has used worksharing to lower its unemployment rate by more than 2 percentage points below its pre-recession level, even though its growth has been no better than growth in the United States. Worksharing does enjoy bipartisan support in the United States and is an option in the unemployment insurance systems in 25 states, but the takeup rate has been extremely low. It’s possible that a major presidential push could substantially increase the use of worksharing.
Anyhow, it is striking that a speech that touched on many liberal themes did not make a commitment to full employment. This should have been noted in the coverage.
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Morning Edition’s top of the hour news segment (sorry, no link) told listeners that the Nikkei dropped in response to the Bank of Japan’s commitment to support stimulus. The Wall Street Journal said the opposite, pointing out that the bank’s asset purchase plans were quite modest. According to the WSJ, the decline in Japan’s stock market and rise in the yen was due to the concern that the bank was insufficiently committed to stimulus.
Morning Edition’s top of the hour news segment (sorry, no link) told listeners that the Nikkei dropped in response to the Bank of Japan’s commitment to support stimulus. The Wall Street Journal said the opposite, pointing out that the bank’s asset purchase plans were quite modest. According to the WSJ, the decline in Japan’s stock market and rise in the yen was due to the concern that the bank was insufficiently committed to stimulus.
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A Reuters article in the NYT told readers that:
“Japan’s public debt burden is already the worst among major economies at more than twice the size of its $5 trillion economy.”
While Japan does have the highest ratio of debt to GDP among wealthy countries, it also has one of the lowest ratios of interest to GDP. Its net interest payments are less than 1.0 percent of GDP. This number would be even lower if payments made to the central bank were subtracted out. (These are refunded to Japan’s treasury.) By comparison, the interest burden in the United States is currently around 1.5 percent of GDP (approximately 1.0 percent after subtracting out money refunded by the Fed). It had been over 3.0 percent of GDP in the early 1990s.
The piece also warned that continued large deficits could raise interest rates and slow the economy. Actually this depends on what happens to the inflation rate. Japan has had near zero inflation or modest deflation for much of the last two decades. If interest rates rise, but the inflation rate rises by more, as is the explicit policy of the government, then real interest rates would decline. This would boost growth in Japan.
A Reuters article in the NYT told readers that:
“Japan’s public debt burden is already the worst among major economies at more than twice the size of its $5 trillion economy.”
While Japan does have the highest ratio of debt to GDP among wealthy countries, it also has one of the lowest ratios of interest to GDP. Its net interest payments are less than 1.0 percent of GDP. This number would be even lower if payments made to the central bank were subtracted out. (These are refunded to Japan’s treasury.) By comparison, the interest burden in the United States is currently around 1.5 percent of GDP (approximately 1.0 percent after subtracting out money refunded by the Fed). It had been over 3.0 percent of GDP in the early 1990s.
The piece also warned that continued large deficits could raise interest rates and slow the economy. Actually this depends on what happens to the inflation rate. Japan has had near zero inflation or modest deflation for much of the last two decades. If interest rates rise, but the inflation rate rises by more, as is the explicit policy of the government, then real interest rates would decline. This would boost growth in Japan.
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It told readers:
“The country faces a fast-growing national debt as a result of waves of retiring workers who expect health care and pension benefits.”
This is not true. The reason the debt has been rising rapidly in recent years is that the economy plunged due to the collapse of the housing bubble. In 2007, before the collapse, the deficit was just 1.2 percent of GDP and the debt to GDP ratio was falling. The Congressional Budget Office projected that the deficit would remain in this neighborhood well into the current decade, even if the Bush tax cuts were not allowed to expire.
Source: Congressional Budget Office.
It told readers:
“The country faces a fast-growing national debt as a result of waves of retiring workers who expect health care and pension benefits.”
This is not true. The reason the debt has been rising rapidly in recent years is that the economy plunged due to the collapse of the housing bubble. In 2007, before the collapse, the deficit was just 1.2 percent of GDP and the debt to GDP ratio was falling. The Congressional Budget Office projected that the deficit would remain in this neighborhood well into the current decade, even if the Bush tax cuts were not allowed to expire.
Source: Congressional Budget Office.
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