The Post probably didn’t have room in the piece for such small points, but when it told readers that the Ryan plan:
“calls for spending cuts and tax changes that would put the nation on course to wipe out deficits and balance the budget by 2040.”
It would have been reasonable to point out that it gets to this balance by virtually eliminating the non-defense, non-Social Security, and non-health care portions of the budget. According to the Congressional Budget Office’s analysis of the Ryan plan (Table 2), all spending on items other than health care and Social Security would be reduced to 4.75 percent of GDP by 2040 and to 3.75 percent of GDP in 2050.
The defense budget is currently over 4.0 percent of GDP and Representative Ryan has indicated that he wants to leave it at this level. That would leave little for the Justice Department, Education Department, Park Service, education, transportation and everything else government does in 2040 and nothing in 2050. That fact would have been worth pointing out in this article.
The Post probably didn’t have room in the piece for such small points, but when it told readers that the Ryan plan:
“calls for spending cuts and tax changes that would put the nation on course to wipe out deficits and balance the budget by 2040.”
It would have been reasonable to point out that it gets to this balance by virtually eliminating the non-defense, non-Social Security, and non-health care portions of the budget. According to the Congressional Budget Office’s analysis of the Ryan plan (Table 2), all spending on items other than health care and Social Security would be reduced to 4.75 percent of GDP by 2040 and to 3.75 percent of GDP in 2050.
The defense budget is currently over 4.0 percent of GDP and Representative Ryan has indicated that he wants to leave it at this level. That would leave little for the Justice Department, Education Department, Park Service, education, transportation and everything else government does in 2040 and nothing in 2050. That fact would have been worth pointing out in this article.
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The piece discusses more aggressive actions that Bernanke could take, such as targeting a higher rate of inflation, a policy he advocated when he was still a professor at Princeton. This is a good article.
The piece discusses more aggressive actions that Bernanke could take, such as targeting a higher rate of inflation, a policy he advocated when he was still a professor at Princeton. This is a good article.
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Okay, we should all be happy that the economy seems to be growing more rapidly that it was at this time last year, but can we try to be a little serious about this. The Census Bureau reported that housing starts fell by 1.1 percent in February. That’s not a big deal, starts had been trending upward and the monthly numbers are always erratic, but nonetheless a fall in starts is a negative sign.
Apparently, the Post did not want to utter a discouraging word. Its business digest section only discussed the 5.1 percent rise in permits for the month, never mentioning the decline in starts. It also featured a graph showing the rise in permits which was mislabeled as a rise in starts (print edition only).
Okay, we should all be happy that the economy seems to be growing more rapidly that it was at this time last year, but can we try to be a little serious about this. The Census Bureau reported that housing starts fell by 1.1 percent in February. That’s not a big deal, starts had been trending upward and the monthly numbers are always erratic, but nonetheless a fall in starts is a negative sign.
Apparently, the Post did not want to utter a discouraging word. Its business digest section only discussed the 5.1 percent rise in permits for the month, never mentioning the decline in starts. It also featured a graph showing the rise in permits which was mislabeled as a rise in starts (print edition only).
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Readers of the front page WAPO piece on manufacturing productivity will assume that neither the Post nor any of the economic experts it consults have heard of arithmetic. The piece points to research showing that manufacturing productivity has been overstated. While it is good to see that the Post has finally noticed research that many of us have talked about for years, the Post grossly misrepresents the issues concerning manufacturing productivity and employment.
The Post presents the question as being one of whether higher productivity or increased imports are responsible for job loss in manufacturing. Those familiar with arithmetic know that the answer is that both are responsible.
Arithmetic tells us this because we know that our net imports of manufactured goods are equal to almost one-third of the manufactured goods we consume. If we produced these goods in the United States then manufacturing employment would rise by close to 40 percent.
On the other hand, the increase in the efficiency of manufacturing production has also affected the demand for labor in the sector. If productivity had not improved then more people would be employed producing the same amount of manufactured goods. While we would have lost some output due to import competition if productivity had not improved, there are sectors of manufacturing that are still subject to limited import competition. In these sectors higher productivity translates fairly directly into fewer jobs.
Insofar as productivity growth has been exaggerated due to a failure to accurately measure imports, as the research cited in this piece shows, it means that a larger portion of job loss has been due to imports and a smaller portion is attributable to productivity growth. However, it doesn’t change the fact that manufacturing productivity growth has still been strong and that both have been important factors explaining job loss.
Remarkably, this piece never once mentions the value of the dollar. The dollar directly affects the competitiveness of U.S. manufactured goods. A 10 percent fall in the real value of the dollar relative to the currencies of our trading partners has the same impact on competitiveness as a sudden surge of 10 percent in labor productivity.
As a historical matter, the United States went from adding jobs in manufacturing to losing jobs when the dollar surged following the East Asian financial crisis in 1997. The decline accelerated as the dollar continued to rise through the end of the 90s.
It is bizarre that a major piece on manufacturing employment would never mention the value of the dollar. This would be like reporting on patterns of gasoline consumption without ever talking about the price.
Readers of the front page WAPO piece on manufacturing productivity will assume that neither the Post nor any of the economic experts it consults have heard of arithmetic. The piece points to research showing that manufacturing productivity has been overstated. While it is good to see that the Post has finally noticed research that many of us have talked about for years, the Post grossly misrepresents the issues concerning manufacturing productivity and employment.
The Post presents the question as being one of whether higher productivity or increased imports are responsible for job loss in manufacturing. Those familiar with arithmetic know that the answer is that both are responsible.
Arithmetic tells us this because we know that our net imports of manufactured goods are equal to almost one-third of the manufactured goods we consume. If we produced these goods in the United States then manufacturing employment would rise by close to 40 percent.
On the other hand, the increase in the efficiency of manufacturing production has also affected the demand for labor in the sector. If productivity had not improved then more people would be employed producing the same amount of manufactured goods. While we would have lost some output due to import competition if productivity had not improved, there are sectors of manufacturing that are still subject to limited import competition. In these sectors higher productivity translates fairly directly into fewer jobs.
Insofar as productivity growth has been exaggerated due to a failure to accurately measure imports, as the research cited in this piece shows, it means that a larger portion of job loss has been due to imports and a smaller portion is attributable to productivity growth. However, it doesn’t change the fact that manufacturing productivity growth has still been strong and that both have been important factors explaining job loss.
Remarkably, this piece never once mentions the value of the dollar. The dollar directly affects the competitiveness of U.S. manufactured goods. A 10 percent fall in the real value of the dollar relative to the currencies of our trading partners has the same impact on competitiveness as a sudden surge of 10 percent in labor productivity.
As a historical matter, the United States went from adding jobs in manufacturing to losing jobs when the dollar surged following the East Asian financial crisis in 1997. The decline accelerated as the dollar continued to rise through the end of the 90s.
It is bizarre that a major piece on manufacturing employment would never mention the value of the dollar. This would be like reporting on patterns of gasoline consumption without ever talking about the price.
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The Washington Post is quickly becoming an employment service for psychics. An article on the Republicans’ latest budget and tax proposals, which will reduce tax rates on corporations and the wealthy, tells readers that Republicans believe that their plan “will spur economic growth and provide them with a politically potent election-year message.”
Reporters know that politicians do not always say what they believe. This is why real newspapers only report what politicians say. Only psychics would try to tell people what politicians actually think.
This piece also wrongly implies that reducing the number of tax brackets from 6 to 2, as the Republicans propose, is connected to tax simplification. It isn’t. To calculate one’s taxes, it is necessary to go to the tax tables and see what you owe given your income level. This is the same process regardless of whether there are 2 tax rates or 200 hundred. (Thanks to Robert Salzberg for calling this one to my attention.)
The Washington Post is quickly becoming an employment service for psychics. An article on the Republicans’ latest budget and tax proposals, which will reduce tax rates on corporations and the wealthy, tells readers that Republicans believe that their plan “will spur economic growth and provide them with a politically potent election-year message.”
Reporters know that politicians do not always say what they believe. This is why real newspapers only report what politicians say. Only psychics would try to tell people what politicians actually think.
This piece also wrongly implies that reducing the number of tax brackets from 6 to 2, as the Republicans propose, is connected to tax simplification. It isn’t. To calculate one’s taxes, it is necessary to go to the tax tables and see what you owe given your income level. This is the same process regardless of whether there are 2 tax rates or 200 hundred. (Thanks to Robert Salzberg for calling this one to my attention.)
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The NYT had a bad case of he said/she said reporting this morning in an article that reported on a panel’s recommendations for improving the nation’s education system. The article noted the panel’s recommendation for increased the choice of schools available for parents to select among. It then cited comments from Randi Weingarten, the President of the American Federation of Teachers, saying:
“school choice options like vouchers and charters, which use public funds but are run by a third party, have not proved to be sustainable or to improve schools.”
This is not just something that Ms. Weingarten says, it also happens to be true. Extensive research has found that the vast majority of charter schools do not result in better performance by standardized test measures than the public schools, and a substantial portion do markedly worse.
The NYT should have pointed out that Ms. Weingarten’s assertion was true and not left it to readers to try to decide between competing claims. The NYT’s reporters have the time to investigate these claims, its readers do not.
The NYT had a bad case of he said/she said reporting this morning in an article that reported on a panel’s recommendations for improving the nation’s education system. The article noted the panel’s recommendation for increased the choice of schools available for parents to select among. It then cited comments from Randi Weingarten, the President of the American Federation of Teachers, saying:
“school choice options like vouchers and charters, which use public funds but are run by a third party, have not proved to be sustainable or to improve schools.”
This is not just something that Ms. Weingarten says, it also happens to be true. Extensive research has found that the vast majority of charter schools do not result in better performance by standardized test measures than the public schools, and a substantial portion do markedly worse.
The NYT should have pointed out that Ms. Weingarten’s assertion was true and not left it to readers to try to decide between competing claims. The NYT’s reporters have the time to investigate these claims, its readers do not.
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Robert Samuelson uses his column today to complain that:
“Four years after the onset of the financial crisis — in March 2008 Bear Stearns was rescued from failure — we still lack a clear understanding of the underlying causes.”
Wow, it sure doesn’t seem very hard to me. The Reagan-Volcker policies of the early 80s broke the link between productivity growth and wage growth for ordinary workers. This meant that demand growth did not necessarily keep pace with output potential as had been true earlier in the post-war period, since higher wages would quickly translate into higher consumption.
That created an environment which opened a door to speculative bubbles. In the 90s it was the stock bubble which drove growth, primarily by pushing saving rates to then record lows. In the last decade it was the housing bubble which drove growth, both by creating a building boom and also by pushing saving rates even lower as bubble-generated home equity led to a consumption boom.
None of this story is new. I was writing about how the stock bubble was driving the economy in the 90s and how the housing bubble was driving the economy as early as 2002. And, I gave the historical picture in Plunder and Blunder: The Rise and Fall of the Bubble Economy.
But, folks like Robert Samuelson would rather pretend that the whole story is a great mystery rather than contemplate the possibility that the economic instability of the last decade had its roots in a pattern of growth that was built on redistributing income from ordinary workers to the most highly paid workers and corporate profits.
Robert Samuelson uses his column today to complain that:
“Four years after the onset of the financial crisis — in March 2008 Bear Stearns was rescued from failure — we still lack a clear understanding of the underlying causes.”
Wow, it sure doesn’t seem very hard to me. The Reagan-Volcker policies of the early 80s broke the link between productivity growth and wage growth for ordinary workers. This meant that demand growth did not necessarily keep pace with output potential as had been true earlier in the post-war period, since higher wages would quickly translate into higher consumption.
That created an environment which opened a door to speculative bubbles. In the 90s it was the stock bubble which drove growth, primarily by pushing saving rates to then record lows. In the last decade it was the housing bubble which drove growth, both by creating a building boom and also by pushing saving rates even lower as bubble-generated home equity led to a consumption boom.
None of this story is new. I was writing about how the stock bubble was driving the economy in the 90s and how the housing bubble was driving the economy as early as 2002. And, I gave the historical picture in Plunder and Blunder: The Rise and Fall of the Bubble Economy.
But, folks like Robert Samuelson would rather pretend that the whole story is a great mystery rather than contemplate the possibility that the economic instability of the last decade had its roots in a pattern of growth that was built on redistributing income from ordinary workers to the most highly paid workers and corporate profits.
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The Post’s Wonkblog had an interesting post about a new study showing that the cost of health insurance for a typical family will be equal to the median family income by 2037, if current trends continue. Unfortunately, the post inaccurately reported that the comparison was with average family income.
Given the growth of inequality in the last three decades this makes a big difference. According to the Census Bureau, median household income in 2010 was 49,445, whereas average income was $67,530. Perhaps more importantly, average income by definition grows in step with the economy whereas median income has been growing slowly as a result of upward redistribution. (The confusion actually is in a chart in the original paper, so Wonkblog can be forgiven for not catching it.)
The story is still an important one, if not quite as dramatic as reported. The vast majority of people in the United States will soon be unable to afford health care if nothing is done to contain costs. This is the second most predictable crisis in history, after the housing bubble, and almost no one is talking about it.
My favorite solution is to take advantage of trade — every other health care system in the world is more efficient than ours. Unfortunately, the political debate in the United States is dominated by Neanderthal protectionists, at least when it comes to trade measures that could lower the income of doctors and other powerful special interest groups.
The Post’s Wonkblog had an interesting post about a new study showing that the cost of health insurance for a typical family will be equal to the median family income by 2037, if current trends continue. Unfortunately, the post inaccurately reported that the comparison was with average family income.
Given the growth of inequality in the last three decades this makes a big difference. According to the Census Bureau, median household income in 2010 was 49,445, whereas average income was $67,530. Perhaps more importantly, average income by definition grows in step with the economy whereas median income has been growing slowly as a result of upward redistribution. (The confusion actually is in a chart in the original paper, so Wonkblog can be forgiven for not catching it.)
The story is still an important one, if not quite as dramatic as reported. The vast majority of people in the United States will soon be unable to afford health care if nothing is done to contain costs. This is the second most predictable crisis in history, after the housing bubble, and almost no one is talking about it.
My favorite solution is to take advantage of trade — every other health care system in the world is more efficient than ours. Unfortunately, the political debate in the United States is dominated by Neanderthal protectionists, at least when it comes to trade measures that could lower the income of doctors and other powerful special interest groups.
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The Washington Post once again jumped over the line separating the news section from the editorial section and fiction from reality. It ran a tribute to North Dakota Senator Kent Conrad on the front page of the business section.
Conrad, the chair of the Senate Budget Committee and perhaps the biggest deficit hawk in the senate, is retiring at the end of the year. His views on the deficit closely parallel the views of the Post editorial page, hence the tribute.
In praising Conrad the article repeatedly makes reference to the report of the Bowles-Simpson commission. In fact, there was no report of the Bowles-Simpson commission. The report that the article is referring to is the report of the co-chairs of the commission, former Senator Alan Simpson and Morgan Stanley director Erskine Bowles.
In order for a report to have been approved by the commission it would have needed the support of 14 members of the commission. This report only had the support of 11 members. As a result, the chairs never even put the report up for a formal vote.
Since the Post’s editorial page is sympathetic to the report of the co-chairs, it apparently feels it is appropriate to misrepresent the report as a report of the commission itself. This has the effect of giving the report greater legitimacy. This is the sort of behavior that has led the Post to be known as “Fox on 15th Street.”
Readers of this piece should have been warned. The second sentence refers to Conrad as “a lonely Cassandra.” Of course Cassandra was the person who foretold of the disaster that eventually befell Troy.
By contrast, Senator Conrad completely missed the disaster that was made inevitable by the growth of the housing bubble. Instead, he was diverting the public’s attention from this imminent crisis with his complaints about budget deficits even at a time when the deficits were relatively modest.
The Washington Post once again jumped over the line separating the news section from the editorial section and fiction from reality. It ran a tribute to North Dakota Senator Kent Conrad on the front page of the business section.
Conrad, the chair of the Senate Budget Committee and perhaps the biggest deficit hawk in the senate, is retiring at the end of the year. His views on the deficit closely parallel the views of the Post editorial page, hence the tribute.
In praising Conrad the article repeatedly makes reference to the report of the Bowles-Simpson commission. In fact, there was no report of the Bowles-Simpson commission. The report that the article is referring to is the report of the co-chairs of the commission, former Senator Alan Simpson and Morgan Stanley director Erskine Bowles.
In order for a report to have been approved by the commission it would have needed the support of 14 members of the commission. This report only had the support of 11 members. As a result, the chairs never even put the report up for a formal vote.
Since the Post’s editorial page is sympathetic to the report of the co-chairs, it apparently feels it is appropriate to misrepresent the report as a report of the commission itself. This has the effect of giving the report greater legitimacy. This is the sort of behavior that has led the Post to be known as “Fox on 15th Street.”
Readers of this piece should have been warned. The second sentence refers to Conrad as “a lonely Cassandra.” Of course Cassandra was the person who foretold of the disaster that eventually befell Troy.
By contrast, Senator Conrad completely missed the disaster that was made inevitable by the growth of the housing bubble. Instead, he was diverting the public’s attention from this imminent crisis with his complaints about budget deficits even at a time when the deficits were relatively modest.
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Those who have been following the problems of the euro zone indebtedness have no doubt heard about the problems of debt crises in Greece, Ireland, Italy, Portugal, and Spain. But apparently France has also had a debt crisis. At least that is what the Post told readers.
An article that told readers that Europe is already so highly taxed that it can only look to cut spending referred to:
“the colossal French government debt that helped push Europe into a dangerous yearlong financial crisis from which it only now is emerging.”
The French government debt is actually not especially large, at around 80 percent of GDP. Furthermore, it was the economic crisis that pushed up French debt from a much more modest 60 percent of GDP. While France did see some increase in interest rates on its debt relative to Germany’s, interest rates never approached the levels seen in the crisis countries.
Much of the problem with French debt stems from the failure of the European Central Bank (ECB) to act as a lender of last resort, which would ensure that interest rates remain low. Also the failure of the ECB to act more aggressively to boost the euro zone economy has slowed growth and raised unemployment in France and across the euro zone. This has also worsened the budget deficit. A serious piece discussing Europe’s fiscal situation would have noted these facts.
Those who have been following the problems of the euro zone indebtedness have no doubt heard about the problems of debt crises in Greece, Ireland, Italy, Portugal, and Spain. But apparently France has also had a debt crisis. At least that is what the Post told readers.
An article that told readers that Europe is already so highly taxed that it can only look to cut spending referred to:
“the colossal French government debt that helped push Europe into a dangerous yearlong financial crisis from which it only now is emerging.”
The French government debt is actually not especially large, at around 80 percent of GDP. Furthermore, it was the economic crisis that pushed up French debt from a much more modest 60 percent of GDP. While France did see some increase in interest rates on its debt relative to Germany’s, interest rates never approached the levels seen in the crisis countries.
Much of the problem with French debt stems from the failure of the European Central Bank (ECB) to act as a lender of last resort, which would ensure that interest rates remain low. Also the failure of the ECB to act more aggressively to boost the euro zone economy has slowed growth and raised unemployment in France and across the euro zone. This has also worsened the budget deficit. A serious piece discussing Europe’s fiscal situation would have noted these facts.
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