The NYT had an interesting article reporting on new research showing a sharply growing gap in educational outcomes based on the income of children’s parents. While the racial gap has fallen sharply, this income gap has exploded.
The discussion of this research was quite valuable, however the second part of the article was devoted to telling readers that nothing can be done. For example, article concluded by presenting the views of Douglas Besharov, a fellow at the Atlantic Council who was formerly at the American Enterprise Institute:
“The problem is a puzzle, he said. ‘No one has the slightest idea what will work. The cupboard is bare.'”
Of course there are all sorts of ideas on measures that would reduce income inequality, which would presumably also reduce the large gap in educational outcomes. For example, if doctors and lawyers were not largely protected from international competition they would no longer have the sort of incomes that would allow them to hire tutors and give other advantages to their children compared with the children of ordinary workers.
The NYT had an interesting article reporting on new research showing a sharply growing gap in educational outcomes based on the income of children’s parents. While the racial gap has fallen sharply, this income gap has exploded.
The discussion of this research was quite valuable, however the second part of the article was devoted to telling readers that nothing can be done. For example, article concluded by presenting the views of Douglas Besharov, a fellow at the Atlantic Council who was formerly at the American Enterprise Institute:
“The problem is a puzzle, he said. ‘No one has the slightest idea what will work. The cupboard is bare.'”
Of course there are all sorts of ideas on measures that would reduce income inequality, which would presumably also reduce the large gap in educational outcomes. For example, if doctors and lawyers were not largely protected from international competition they would no longer have the sort of incomes that would allow them to hire tutors and give other advantages to their children compared with the children of ordinary workers.
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Short-term measures of real family income are driven primarily by sampling error and erratic movements in the consumer price index. The latter is mostly due to fluctuations in energy prices.
This is the reason that most economists, unlike USA Today, would not take seriously a report showing a large gain in median family income in the last four months of 2011. The main reason for the sharp rise in income shown in this report is likely the sharp drop in the consumer price index over this period.
It is more useful to report these data over longer periods of time so that random fluctuations play less of a role. Given the vast amount of material that is available for free on the web, it is especially difficult to understand why USA Today would place so much emphasis on a newly produced report that is being sold for $20 each.
Short-term measures of real family income are driven primarily by sampling error and erratic movements in the consumer price index. The latter is mostly due to fluctuations in energy prices.
This is the reason that most economists, unlike USA Today, would not take seriously a report showing a large gain in median family income in the last four months of 2011. The main reason for the sharp rise in income shown in this report is likely the sharp drop in the consumer price index over this period.
It is more useful to report these data over longer periods of time so that random fluctuations play less of a role. Given the vast amount of material that is available for free on the web, it is especially difficult to understand why USA Today would place so much emphasis on a newly produced report that is being sold for $20 each.
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BusinessWeek decided to take a shot at Paul Krugman. Okay Krugman, like everyone else in public debate, is fair game. But if they can find a reporter who knows a little economics they might better serve their readers by constructing a little scorecard.
Krugman (along with a few other Keynesian types out here) has staked out very clear positions on a number of key economic issues such as the size of the stimulus, the impact of deficits on interest rates, and the impact of quantitative easing on inflation. Maybe Businessweek can tell its readers whether the Keynesians have been right or whether the fresh water types carried the day.
Then, if they really want to be cruel, they can ask who warned about the housing bubble before it actually sank the economy.
BusinessWeek decided to take a shot at Paul Krugman. Okay Krugman, like everyone else in public debate, is fair game. But if they can find a reporter who knows a little economics they might better serve their readers by constructing a little scorecard.
Krugman (along with a few other Keynesian types out here) has staked out very clear positions on a number of key economic issues such as the size of the stimulus, the impact of deficits on interest rates, and the impact of quantitative easing on inflation. Maybe Businessweek can tell its readers whether the Keynesians have been right or whether the fresh water types carried the day.
Then, if they really want to be cruel, they can ask who warned about the housing bubble before it actually sank the economy.
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The evil doers put CEPR’s website out of commission this morning. We managed to get it back up and restore the posts on BTP this afternoon. Unfortunately, it seems that comments on several recent posts were lost in cyberspace. Sorry to lose these words of wisdom. Don’t take it personally.
The evil doers put CEPR’s website out of commission this morning. We managed to get it back up and restore the posts on BTP this afternoon. Unfortunately, it seems that comments on several recent posts were lost in cyberspace. Sorry to lose these words of wisdom. Don’t take it personally.
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A column by Norbert Walter in the NYT defended Germany against complaints over its trade surplus by pointing out that its export industry acts as an engine for Europe’s economy. He accurately points that Germany’s export industry boosts demand for supplier industries in Netherlands and France. He then inaccurately asserts that:
“unemployed workers in Madrid or Athens can easily move to Munich or Cologne for work.”
We know that unemployed workers in Madrid and Athens cannot easily move to Munich or Cologne because in general they don’t. Prior generations of workers from Spain and Greece did often move to Germany and other northern European countries in search of work, but this practice has become much rarer in the last two decades.
Walter’s argument that Germany, with an aging population, should have a trade surplus is reasonable, except the surplus should not be with other countries with similar demographics. In standard economic theory we would expect to see Germany have large trade surpluses with rapidly growing developing countries like China and India that would be easily able to repay the debt incurred.
Slow growing countries like Greece and Italy will not. Germanys cannot both want a large trade surplus with these countries and then complain about their debts. When it makes such complaints, Germany is complaining about its own behavior as much as that of Greece and Italy, since there are no borrowers where there are no lenders.
A column by Norbert Walter in the NYT defended Germany against complaints over its trade surplus by pointing out that its export industry acts as an engine for Europe’s economy. He accurately points that Germany’s export industry boosts demand for supplier industries in Netherlands and France. He then inaccurately asserts that:
“unemployed workers in Madrid or Athens can easily move to Munich or Cologne for work.”
We know that unemployed workers in Madrid and Athens cannot easily move to Munich or Cologne because in general they don’t. Prior generations of workers from Spain and Greece did often move to Germany and other northern European countries in search of work, but this practice has become much rarer in the last two decades.
Walter’s argument that Germany, with an aging population, should have a trade surplus is reasonable, except the surplus should not be with other countries with similar demographics. In standard economic theory we would expect to see Germany have large trade surpluses with rapidly growing developing countries like China and India that would be easily able to repay the debt incurred.
Slow growing countries like Greece and Italy will not. Germanys cannot both want a large trade surplus with these countries and then complain about their debts. When it makes such complaints, Germany is complaining about its own behavior as much as that of Greece and Italy, since there are no borrowers where there are no lenders.
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It seems not, since a graph accompanying an article on Greece’s debt negotiations still shows countries like Spain, Greece and Italy with modest growth since the downturn began in 2007. In fact, all three economies have shrunk in when growth is adjusted for inflation. It will be interesting to see how long it takes the NYT to correct this one.
It seems not, since a graph accompanying an article on Greece’s debt negotiations still shows countries like Spain, Greece and Italy with modest growth since the downturn began in 2007. In fact, all three economies have shrunk in when growth is adjusted for inflation. It will be interesting to see how long it takes the NYT to correct this one.
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So would trade policy that was not designed to lower their living standards. Nicholas Kristof devoted his column to the worsening plight of white workers without college degrees over the last three decades. He notes that the share of prime age workers with only a high school degree who have dropped out of the labor force has quadrupled since 1968.
This can be explained in part by the Federal Reserve Board to pursue policies that promoted full employment. When the economy did achieve low rates of unemployment, as was the case in the late 90s, workers at all education levels were being pulled into the labor force. There were strong wage gains at all points along the income distribution. If the Fed was actually doings its job and promoting full employment, instead of ignoring asset bubbles, like the stock and housing bubbles, the late 90s would be the norm rather than the exception.
Trade policy has also worked to weaken the economic situation of these workers since it has been designed to put them in direct competition with low-paid workers in Mexico, China and other developing countries. By contrast, the protectionist barriers that make it difficult for lawyers, doctors and other highly educated professionals from these countries from competing with our professionals have generally been left in place. The theoretical and actual result of such policies is a redistribution from less educated workers to more educated workers.
So would trade policy that was not designed to lower their living standards. Nicholas Kristof devoted his column to the worsening plight of white workers without college degrees over the last three decades. He notes that the share of prime age workers with only a high school degree who have dropped out of the labor force has quadrupled since 1968.
This can be explained in part by the Federal Reserve Board to pursue policies that promoted full employment. When the economy did achieve low rates of unemployment, as was the case in the late 90s, workers at all education levels were being pulled into the labor force. There were strong wage gains at all points along the income distribution. If the Fed was actually doings its job and promoting full employment, instead of ignoring asset bubbles, like the stock and housing bubbles, the late 90s would be the norm rather than the exception.
Trade policy has also worked to weaken the economic situation of these workers since it has been designed to put them in direct competition with low-paid workers in Mexico, China and other developing countries. By contrast, the protectionist barriers that make it difficult for lawyers, doctors and other highly educated professionals from these countries from competing with our professionals have generally been left in place. The theoretical and actual result of such policies is a redistribution from less educated workers to more educated workers.
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Cary Sherman, the chief executive of the Recording Industry Association of America (RIAA), had a column in the NYT complaining about “how the democratic process functions in the digital age.” The gist of the complaint seems to be that the Internet allows for the widespread dispersion of views contrary to the interests of the RIAA through outlets that they cannot dominate. This apparently contrasts with traditional media outlets like the NYT which seems to have an open door for the industry to say almost anything it wants regardless of whether it is true.
For example the column absurdly claims that Congress had an obligation to pass legislation like SOPA because it has a “constitutional (and economic) imperative to protect American property from theft, to shield consumers from counterfeit products and fraud, and to combat foreign criminals who exploit technology to steal American ingenuity and jobs.”
Of course this it is absurd to argue that Congress is obligated to take steps to enforce every property claim to the extent that its owners would like. For example, it is standard practice for people to tear down political posters expressing views that they don’t like. Congress has never felt the need to pass special legislation that would prevent such destruction of property. According to Mr. Sherman’s logic, Congress has a constitutional obligation to pass stronger bills to ensure that such destruction of property does not take place.
Furthermore, to be analogous to SOPA, Congress would require third parties to take steps to ensure that destruction of political signs does not occur. This would mean that it could fine car companies for selling cars to people who use them to tear down political signs.
The jobs part of Mr. Sherman’s argument is even more ridiculous. The money that people save by not paying his clients doesn’t go under a mattress; it is spent on other products. This is the exact same argument as the gains from trade liberalization except instead of eliminating a tariff that might raise the price of a product by 10-20 percent, the availability of unauthorized copies can reduce the price of a product by 100 percent. This leaves consumers with more money to spend on cars, health care and a wide variety of other goods and services.
The real issue here is that copyright is an archaic property form that it is no longer practical to enforce in the Internet Age. Serious policy people should be looking to develop alternative mechanisms for financing creative and artistic work. Unfortunately, the organizations that ostensibly represent creative workers are not very creative.
It is impressive that the NYT allows a piece from the industry to appear with apparently no fact checking. Two days earlier it had a similar column complaining about the failure of SOPA. Given its dominance of the NYT’s opinion pages, it is understandable that the RIAA would be upset about the growth of independent voices on the Internet.
Cary Sherman, the chief executive of the Recording Industry Association of America (RIAA), had a column in the NYT complaining about “how the democratic process functions in the digital age.” The gist of the complaint seems to be that the Internet allows for the widespread dispersion of views contrary to the interests of the RIAA through outlets that they cannot dominate. This apparently contrasts with traditional media outlets like the NYT which seems to have an open door for the industry to say almost anything it wants regardless of whether it is true.
For example the column absurdly claims that Congress had an obligation to pass legislation like SOPA because it has a “constitutional (and economic) imperative to protect American property from theft, to shield consumers from counterfeit products and fraud, and to combat foreign criminals who exploit technology to steal American ingenuity and jobs.”
Of course this it is absurd to argue that Congress is obligated to take steps to enforce every property claim to the extent that its owners would like. For example, it is standard practice for people to tear down political posters expressing views that they don’t like. Congress has never felt the need to pass special legislation that would prevent such destruction of property. According to Mr. Sherman’s logic, Congress has a constitutional obligation to pass stronger bills to ensure that such destruction of property does not take place.
Furthermore, to be analogous to SOPA, Congress would require third parties to take steps to ensure that destruction of political signs does not occur. This would mean that it could fine car companies for selling cars to people who use them to tear down political signs.
The jobs part of Mr. Sherman’s argument is even more ridiculous. The money that people save by not paying his clients doesn’t go under a mattress; it is spent on other products. This is the exact same argument as the gains from trade liberalization except instead of eliminating a tariff that might raise the price of a product by 10-20 percent, the availability of unauthorized copies can reduce the price of a product by 100 percent. This leaves consumers with more money to spend on cars, health care and a wide variety of other goods and services.
The real issue here is that copyright is an archaic property form that it is no longer practical to enforce in the Internet Age. Serious policy people should be looking to develop alternative mechanisms for financing creative and artistic work. Unfortunately, the organizations that ostensibly represent creative workers are not very creative.
It is impressive that the NYT allows a piece from the industry to appear with apparently no fact checking. Two days earlier it had a similar column complaining about the failure of SOPA. Given its dominance of the NYT’s opinion pages, it is understandable that the RIAA would be upset about the growth of independent voices on the Internet.
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There are plenty of books on economics that are written by people who are very confused on the topic. When a news outlet like NPR chooses to devote a major segment to one such book, it should at least make sure that the person interviewing the author has some understanding of economics. That does not seem to have been the case in its treatment of Philip Coggan, who just wrote the book, Paper Promises: Debt, Money and the New World Order.
According to the segment, Coggan’s thesis is that when the United States went off the gold standard in 1973, it opened to door to the creation of asset bubbles. There are two obvious problems with this story.
First, we had plenty of asset bubbles when the economy was on the gold standard. A knowledgeable reporter might have asked Coggan why the gold standard did not prevent the stock bubble of the 1920s or the land bubbles of that decade in many parts of the country. Other countries on the gold standard also had asset bubbles.
The other major problem with Coggan’s thesis is that the United States was not really on the gold standard after 1933. Usually the gold standard is taken to mean that the currency can be redeemed for gold at a fixed rate. This was not true for individuals and businesses after 1933. In fact, they were prohibited from owning gold. Only foreign central banks could redeem dollars for gold and this practice was strongly discouraged as a matter of policy.
Other parts of his story also don’t correspond well to reality. The United States went completely off the gold standard in 1973. The first notable bubble did not arise until the mid-90s, more than 20 years later. That seems a pretty weak link.
The piece then quotes Coggan:
“‘The result of all that [central banks supporting the economy after bubbles burst] was that it was kind of a one-way bet for speculators: Keep borrowing money to keep buying assets; central banks will always bail you out,’ Coggan says. ‘And that’s why we ended up in this mess that we are in … with lots of debts and central banks creating money to try and prop the whole system up.'”
Coggan may have missed it, but the Fed did not prop up the stock market when the bubble burst in the years 2000-2002. The Nasdaq fell from a peak of more than 5000 to a low of less than 1200 in the summer of 2002. It never came close to recovering even half of these losses. If the issue is supposed to be that the Fed prevented investors from losing money, this is clearly not true. Plenty of people lost lots of money in the collapse of the stock bubble, why would they think the Fed would bail them out if the housing market collapsed?
In short, nothing presented in this segment makes any sense. If the segment accurately represents the main points of this book then it is one that richly deserves to be ignored.
There are plenty of books on economics that are written by people who are very confused on the topic. When a news outlet like NPR chooses to devote a major segment to one such book, it should at least make sure that the person interviewing the author has some understanding of economics. That does not seem to have been the case in its treatment of Philip Coggan, who just wrote the book, Paper Promises: Debt, Money and the New World Order.
According to the segment, Coggan’s thesis is that when the United States went off the gold standard in 1973, it opened to door to the creation of asset bubbles. There are two obvious problems with this story.
First, we had plenty of asset bubbles when the economy was on the gold standard. A knowledgeable reporter might have asked Coggan why the gold standard did not prevent the stock bubble of the 1920s or the land bubbles of that decade in many parts of the country. Other countries on the gold standard also had asset bubbles.
The other major problem with Coggan’s thesis is that the United States was not really on the gold standard after 1933. Usually the gold standard is taken to mean that the currency can be redeemed for gold at a fixed rate. This was not true for individuals and businesses after 1933. In fact, they were prohibited from owning gold. Only foreign central banks could redeem dollars for gold and this practice was strongly discouraged as a matter of policy.
Other parts of his story also don’t correspond well to reality. The United States went completely off the gold standard in 1973. The first notable bubble did not arise until the mid-90s, more than 20 years later. That seems a pretty weak link.
The piece then quotes Coggan:
“‘The result of all that [central banks supporting the economy after bubbles burst] was that it was kind of a one-way bet for speculators: Keep borrowing money to keep buying assets; central banks will always bail you out,’ Coggan says. ‘And that’s why we ended up in this mess that we are in … with lots of debts and central banks creating money to try and prop the whole system up.'”
Coggan may have missed it, but the Fed did not prop up the stock market when the bubble burst in the years 2000-2002. The Nasdaq fell from a peak of more than 5000 to a low of less than 1200 in the summer of 2002. It never came close to recovering even half of these losses. If the issue is supposed to be that the Fed prevented investors from losing money, this is clearly not true. Plenty of people lost lots of money in the collapse of the stock bubble, why would they think the Fed would bail them out if the housing market collapsed?
In short, nothing presented in this segment makes any sense. If the segment accurately represents the main points of this book then it is one that richly deserves to be ignored.
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David Brooks devoted today’s column to a plea to use a broad range of approaches to combating poverty in the hope that some will work. For this reason his focus on President Obama’s decision to end a school voucher program in the District of Columbia is misplaced.
President Obama is not ending school voucher programs, in fact he is protecting the idea of local control that could lead to exactly the sort of diversity of approaches that Brooks is touting. The issue is that Congress has sought to deny local control to the District of Columbia, which has opted not to use school vouchers. Obama’s action simply gives the same authority to the people of the District of Columbia to run their schools as people in other cities in other cities enjoy.
David Brooks devoted today’s column to a plea to use a broad range of approaches to combating poverty in the hope that some will work. For this reason his focus on President Obama’s decision to end a school voucher program in the District of Columbia is misplaced.
President Obama is not ending school voucher programs, in fact he is protecting the idea of local control that could lead to exactly the sort of diversity of approaches that Brooks is touting. The issue is that Congress has sought to deny local control to the District of Columbia, which has opted not to use school vouchers. Obama’s action simply gives the same authority to the people of the District of Columbia to run their schools as people in other cities in other cities enjoy.
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