The Post had an interesting piece discussing the structural problems in the construction of the euro. While the basic points are largely accurate, it does misrepresent a couple of issues.
First, contrary to what the piece suggests, there was no general recognition at the time that the euro was created that Germany’s economy would somehow dominate the euro zone. In fact, in the 90s and even at the start of the last decade, Germany’s economy was viewed as seriously troubled. For example, Adam Posen, a prominent economist who now sits on the Bank of England’s monetary policy committee worried in 2002 that Germany was turning Japanese (that wasn’t a compliment).
The fact that Germany’s economy did turn out to dominate the euro zone was a major surprise. This shows the ability of economies to turn around quickly or at least in ways that are unexpected by economists (i.e. the people who are the expert sources for these pieces).
The other major misrepresentation or understatement in the piece was that the euro’s founders did not anticipate that the European Central Bank (ECB) would be run by ungodly incompetent people. The ECB ignored the growth of enormous housing bubbles in Spain and Ireland that were leading to enormous imbalances in the euro zone economies. It was 100 percent predictable that these bubbles would collapse and lead to enormous adjustment problems when they did. However the ECB opted to ignore their growth.
Remarkably, even today it takes zero responsibility for the failure to recognize the dangers posed by these bubbles and the consequences from their collapse. Any currency needs competent people to manage its central bank. If these cannot be found (a skills mismatch?), then the currency will face serious problems.
The Post had an interesting piece discussing the structural problems in the construction of the euro. While the basic points are largely accurate, it does misrepresent a couple of issues.
First, contrary to what the piece suggests, there was no general recognition at the time that the euro was created that Germany’s economy would somehow dominate the euro zone. In fact, in the 90s and even at the start of the last decade, Germany’s economy was viewed as seriously troubled. For example, Adam Posen, a prominent economist who now sits on the Bank of England’s monetary policy committee worried in 2002 that Germany was turning Japanese (that wasn’t a compliment).
The fact that Germany’s economy did turn out to dominate the euro zone was a major surprise. This shows the ability of economies to turn around quickly or at least in ways that are unexpected by economists (i.e. the people who are the expert sources for these pieces).
The other major misrepresentation or understatement in the piece was that the euro’s founders did not anticipate that the European Central Bank (ECB) would be run by ungodly incompetent people. The ECB ignored the growth of enormous housing bubbles in Spain and Ireland that were leading to enormous imbalances in the euro zone economies. It was 100 percent predictable that these bubbles would collapse and lead to enormous adjustment problems when they did. However the ECB opted to ignore their growth.
Remarkably, even today it takes zero responsibility for the failure to recognize the dangers posed by these bubbles and the consequences from their collapse. Any currency needs competent people to manage its central bank. If these cannot be found (a skills mismatch?), then the currency will face serious problems.
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A NYT article on Governor Romney’s approach to the economy discussed his attitude toward regulation. It tells readers that Romney:
“stopped talking about the benefits of regulation, focusing instead on its costs. His campaign platform includes proposals to curtail rule making, like capping the total cost of regulation at the current level, without adjusting for inflation.”
What does a limit on the cost of regulation mean? Suppose that I have more oil than Saudi Arabia underneath my backyard, but recovering it requires an incredibly hazardous chemical that will cause the death of everyone in a 10-mile radius. (I live within DC, that’s a lot of people.)
Does Governor Romney give me the green light to wipe out the DC metro area because the regulation prohibiting drilling would be very costly? That would seem to be the implication of an approach to regulation that only looks at the cost.
This would be an absurd approach to regulation. If that is really what Romney is proposing then the NYT should feature a front page article on his crazy views on regulation. Voters should be made aware of how wildly out of line Romney is with current practices.
Alternatively, if this is not what Romney is saying, then the NYT should get his approach to regulation right.
A NYT article on Governor Romney’s approach to the economy discussed his attitude toward regulation. It tells readers that Romney:
“stopped talking about the benefits of regulation, focusing instead on its costs. His campaign platform includes proposals to curtail rule making, like capping the total cost of regulation at the current level, without adjusting for inflation.”
What does a limit on the cost of regulation mean? Suppose that I have more oil than Saudi Arabia underneath my backyard, but recovering it requires an incredibly hazardous chemical that will cause the death of everyone in a 10-mile radius. (I live within DC, that’s a lot of people.)
Does Governor Romney give me the green light to wipe out the DC metro area because the regulation prohibiting drilling would be very costly? That would seem to be the implication of an approach to regulation that only looks at the cost.
This would be an absurd approach to regulation. If that is really what Romney is proposing then the NYT should feature a front page article on his crazy views on regulation. Voters should be made aware of how wildly out of line Romney is with current practices.
Alternatively, if this is not what Romney is saying, then the NYT should get his approach to regulation right.
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Annie Lowry has a nice blogpost in the Economix section of the NYT listing some of the areas where Republicans and Democrats seem to largely agree (meaning the leadership, not the base). I’d agree with her list and add a few more items.
Both parties seem to agree on an uncompetitive dollar, having the Fed and Treasury maintain the dollar at a level that prices U.S. goods out of many markets. The result is a large trade deficit (currently around 4 percent of GDP or $600 billion a year) and the loss of around 5 million jobs in manufacturing. This is a major source of downward pressure on the wages of the bulk of the workforce.
Both parties seem to agree on extending patent and copyright protections both in the U.S. and around the world. These are incredibly costly forms of protectionism and have the effect of redistributing income upward since very few people in the bottom 90 percent draw their income from patent rents.
And both parties seem intent on preserving too big to fail banks which get a subsidy of tens of billions of dollars a year from their implicit government insurance.
I could list others, but these items amount to substantial transfers from the rest of us to those on top. It is worth noting the agreement on these issues by both parties’ leaders.
Annie Lowry has a nice blogpost in the Economix section of the NYT listing some of the areas where Republicans and Democrats seem to largely agree (meaning the leadership, not the base). I’d agree with her list and add a few more items.
Both parties seem to agree on an uncompetitive dollar, having the Fed and Treasury maintain the dollar at a level that prices U.S. goods out of many markets. The result is a large trade deficit (currently around 4 percent of GDP or $600 billion a year) and the loss of around 5 million jobs in manufacturing. This is a major source of downward pressure on the wages of the bulk of the workforce.
Both parties seem to agree on extending patent and copyright protections both in the U.S. and around the world. These are incredibly costly forms of protectionism and have the effect of redistributing income upward since very few people in the bottom 90 percent draw their income from patent rents.
And both parties seem intent on preserving too big to fail banks which get a subsidy of tens of billions of dollars a year from their implicit government insurance.
I could list others, but these items amount to substantial transfers from the rest of us to those on top. It is worth noting the agreement on these issues by both parties’ leaders.
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There may be a temptation by some in the business media to make a big issue out of the sharp decline in the Conference Board’s measure of consumer confidence. Those so tempted would be wrong.
The key point to note is that almost all of the decline was in the future expectations index. The current conditions index was essentially unchanged, edging down from 45.9 to 45.8. While current conditions index does fit reasonably well with current consumption, there is little correlation between the future expectations index and consumption. This index is highly erratic and therefore not a good predictor of consumption either present or future.
There may be a temptation by some in the business media to make a big issue out of the sharp decline in the Conference Board’s measure of consumer confidence. Those so tempted would be wrong.
The key point to note is that almost all of the decline was in the future expectations index. The current conditions index was essentially unchanged, edging down from 45.9 to 45.8. While current conditions index does fit reasonably well with current consumption, there is little correlation between the future expectations index and consumption. This index is highly erratic and therefore not a good predictor of consumption either present or future.
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Mitt Romney has made a big deal out of President Obama’s decision to grant requests by governors from both parties for more flexibility in the work requirement in TANF, the reformed welfare program. The question that millions are now asking is whether the NYT has a work requirement for its reporters. David Leonhardt’s piece on Mitt Romney’s first 100 days suggests otherwise.
One of the big questions that serious people have been raising is how Governor Romney proposes to pay for the large tax cuts for the wealthy that his plan would provide. Romney has claimed that he would pay for these tax cuts by eliminating tax deductions. The Tax Policy Center of the Brookings Institution and the Urban Institute claim that this plan does not add up. It would be necessary to substantially reduce or eliminate the mortgage interest deduction, the deduction for employer provided health care and other deductions for middle income taxpayers to make up the lost revenue.
In dealing with this problem, which implies that Romney would impose a substantial tax increase on millions of middle income families, Leonhardt refers us to a proposal by Representative Ryan which would allow people to pay taxes under the current schedule or use the new lower tax rates. Does this add up? Can a plan that provides a tax cut to everyone who knows arithmetic (or knows someone who knows arithmetic) produce the same amount of revenue as the current tax system?
It’s Leonhardt’s job to investigate this issue. I’m sure that he is a busy guy, but he has more time and probably more expertise to examine this issue than most of his readers. It is incredibly irresponsible to pretend that numbers add up when they don’t. If Leonhardt didn’t have the time to assess this key point, then he didn’t have time to write the piece.
Mitt Romney has made a big deal out of President Obama’s decision to grant requests by governors from both parties for more flexibility in the work requirement in TANF, the reformed welfare program. The question that millions are now asking is whether the NYT has a work requirement for its reporters. David Leonhardt’s piece on Mitt Romney’s first 100 days suggests otherwise.
One of the big questions that serious people have been raising is how Governor Romney proposes to pay for the large tax cuts for the wealthy that his plan would provide. Romney has claimed that he would pay for these tax cuts by eliminating tax deductions. The Tax Policy Center of the Brookings Institution and the Urban Institute claim that this plan does not add up. It would be necessary to substantially reduce or eliminate the mortgage interest deduction, the deduction for employer provided health care and other deductions for middle income taxpayers to make up the lost revenue.
In dealing with this problem, which implies that Romney would impose a substantial tax increase on millions of middle income families, Leonhardt refers us to a proposal by Representative Ryan which would allow people to pay taxes under the current schedule or use the new lower tax rates. Does this add up? Can a plan that provides a tax cut to everyone who knows arithmetic (or knows someone who knows arithmetic) produce the same amount of revenue as the current tax system?
It’s Leonhardt’s job to investigate this issue. I’m sure that he is a busy guy, but he has more time and probably more expertise to examine this issue than most of his readers. It is incredibly irresponsible to pretend that numbers add up when they don’t. If Leonhardt didn’t have the time to assess this key point, then he didn’t have time to write the piece.
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It is remarkable that in a campaign season where the media are constantly telling us that the election is a referendum about the size and role of government, no one seems to have noticed that the jury’s verdict in the Apple-Samsung case is a big victory for big government. The ruling gives strong protection to Apple’s patents, which means that it will be able to charge more money for its iPad, iPhone and other related products in the years ahead. The additional charges could well run into the hundreds of billions of dollars over the next decade.
From the standpoint of consumers this has the same effect as if the government imposed a large tax on these products. However in this case, the government is simply agreeing to arrest competitors so that Apple can effectively impose the tax.
This is big government interference in the free market. Remarkably no reporters treat it as such. For some reason if it is not tax or spending policy, reporters generally fail to recognize the hand of the government. This is unfortunate since the impact of the government’s actions in setting the ground rules for the market swamps the impact of the tax and spending decisions that dominate public debate.
[Addendum: For the record, I don’t have strong views on this case. In general I am not a fan of strong patent/copyright protection, but I haven’t studied this one enough to see the extent to which Apple has a serious case. On the other hand, there is zero doubt that if the ruling holds, Apple will be charging more for its products than if doesn’t.]
It is remarkable that in a campaign season where the media are constantly telling us that the election is a referendum about the size and role of government, no one seems to have noticed that the jury’s verdict in the Apple-Samsung case is a big victory for big government. The ruling gives strong protection to Apple’s patents, which means that it will be able to charge more money for its iPad, iPhone and other related products in the years ahead. The additional charges could well run into the hundreds of billions of dollars over the next decade.
From the standpoint of consumers this has the same effect as if the government imposed a large tax on these products. However in this case, the government is simply agreeing to arrest competitors so that Apple can effectively impose the tax.
This is big government interference in the free market. Remarkably no reporters treat it as such. For some reason if it is not tax or spending policy, reporters generally fail to recognize the hand of the government. This is unfortunate since the impact of the government’s actions in setting the ground rules for the market swamps the impact of the tax and spending decisions that dominate public debate.
[Addendum: For the record, I don’t have strong views on this case. In general I am not a fan of strong patent/copyright protection, but I haven’t studied this one enough to see the extent to which Apple has a serious case. On the other hand, there is zero doubt that if the ruling holds, Apple will be charging more for its products than if doesn’t.]
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Okay folks, mark August 25, 2012 in your calendar. That is the day that Matt Miller clearly stated on the Washington Post op-ed page that the problem is not Medicare, but the broken U.S. health care system. Miller noted that we spend more than twice as large a share of our GDP on health care as the average for other wealthy countries and have little to show for it in terms of outcomes.
He attributes this additional expense to the medical-industrial complex. Miller tells readers:
“It’s [health care entitlement reform] about weaning the members of our medical-industrial complex from their entitlement to far higher payments, despite shabby results, than their counterparts abroad get.”
Oh yeah, there it is folks, sitting there for all to see on the op-ed page of the Washington Post, truly amazing. (In fairness, Ezra Klein has made this point many times on his blog.)
So Matt Miller deserves a warm welcome to the reality based community. And the Post op-ed page editors should be congratulated for allowing a serious discussion of health care.
The next question is whether we can talk about some measures to address the problem. My favorite starting point is some free trade in health care: allow Medicare beneficiaries buy into the more efficient programs elsewhere and split the savings in the government. Unfortunately the Post is probably too ideologically committed to protectionism to ever allow an idea like this to appear in the paper.
Okay folks, mark August 25, 2012 in your calendar. That is the day that Matt Miller clearly stated on the Washington Post op-ed page that the problem is not Medicare, but the broken U.S. health care system. Miller noted that we spend more than twice as large a share of our GDP on health care as the average for other wealthy countries and have little to show for it in terms of outcomes.
He attributes this additional expense to the medical-industrial complex. Miller tells readers:
“It’s [health care entitlement reform] about weaning the members of our medical-industrial complex from their entitlement to far higher payments, despite shabby results, than their counterparts abroad get.”
Oh yeah, there it is folks, sitting there for all to see on the op-ed page of the Washington Post, truly amazing. (In fairness, Ezra Klein has made this point many times on his blog.)
So Matt Miller deserves a warm welcome to the reality based community. And the Post op-ed page editors should be congratulated for allowing a serious discussion of health care.
The next question is whether we can talk about some measures to address the problem. My favorite starting point is some free trade in health care: allow Medicare beneficiaries buy into the more efficient programs elsewhere and split the savings in the government. Unfortunately the Post is probably too ideologically committed to protectionism to ever allow an idea like this to appear in the paper.
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The Washington Post has long been known for its sycophantic coverage of the rich and powerful but it may have hit a new low today. The theme of an article on the presidential race was that Representative Paul Ryan, the Republican vice-presidential candidate, used the word “baseline” in a discussion of the budget with reporters. The reporter and/or editor was just incredibly impressed with this fact.
Real reporters might ask Ryan to identify some of the loopholes that he plans to close to make up for his tax cuts to the wealthy (e.g. mortgage interest deduction, deduction for employer provided health insurance etc.). A real reporter might also ask him to be more specific about the programs he plans to cut or eliminate over the next decade to meet his spending targets. And, they might ask him if he really intends to eliminate the whole federal government by 2040, except for Social Security, health care and the Defense Department as the Congressional Budget Office’s analysis of his budget implies.
But hey, those would be questions raised by real reporters. The Post is just so awed by the fact that Ryan used the word “baseline,” wow!
The Washington Post has long been known for its sycophantic coverage of the rich and powerful but it may have hit a new low today. The theme of an article on the presidential race was that Representative Paul Ryan, the Republican vice-presidential candidate, used the word “baseline” in a discussion of the budget with reporters. The reporter and/or editor was just incredibly impressed with this fact.
Real reporters might ask Ryan to identify some of the loopholes that he plans to close to make up for his tax cuts to the wealthy (e.g. mortgage interest deduction, deduction for employer provided health insurance etc.). A real reporter might also ask him to be more specific about the programs he plans to cut or eliminate over the next decade to meet his spending targets. And, they might ask him if he really intends to eliminate the whole federal government by 2040, except for Social Security, health care and the Defense Department as the Congressional Budget Office’s analysis of his budget implies.
But hey, those would be questions raised by real reporters. The Post is just so awed by the fact that Ryan used the word “baseline,” wow!
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Both the NYT and USA Today have convinced themselves that house sales are well below their trend level, with the latter telling us that a 5.5 million annual sales rate of existing homes considered healthy. In fact, we are pretty much back to trend levels of sales. In the mid-90s before the bubble began to distort the market, sales averaged about 3.5 million a year. A simple adjustment for the 15 percent population growth over this period would imply an annual sales rate of 4 million existing homes. That is somewhat below the current 4.5 million sales rate.
The gap between the current sales rate and the trend more than makes up for the continued weakness in new home sales. So, what are these folks talking about?
Both the NYT and USA Today have convinced themselves that house sales are well below their trend level, with the latter telling us that a 5.5 million annual sales rate of existing homes considered healthy. In fact, we are pretty much back to trend levels of sales. In the mid-90s before the bubble began to distort the market, sales averaged about 3.5 million a year. A simple adjustment for the 15 percent population growth over this period would imply an annual sales rate of 4 million existing homes. That is somewhat below the current 4.5 million sales rate.
The gap between the current sales rate and the trend more than makes up for the continued weakness in new home sales. So, what are these folks talking about?
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