In an article noting that some Republican members of the supercommittee are willing to raise taxes, the Washington Post told readers that Republicans might be willing to make concessions on taxes because they are:
“Party leaders wary of Congress’s dismal approval ratings are loath to appear incapable of deficit reduction.”
The packages that have been talked about in the media include cuts to Social Security and Medicare, both of which are likely to be highly unpopular. It is not clear that members of Congress who are concerned about their approval ratings would go this route. However there is little doubt that the Washington Post (in both its editorial and news sections) will warmly praise members of Congress for reaching an agreement as will other major news outlets.
In an article noting that some Republican members of the supercommittee are willing to raise taxes, the Washington Post told readers that Republicans might be willing to make concessions on taxes because they are:
“Party leaders wary of Congress’s dismal approval ratings are loath to appear incapable of deficit reduction.”
The packages that have been talked about in the media include cuts to Social Security and Medicare, both of which are likely to be highly unpopular. It is not clear that members of Congress who are concerned about their approval ratings would go this route. However there is little doubt that the Washington Post (in both its editorial and news sections) will warmly praise members of Congress for reaching an agreement as will other major news outlets.
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Someone has to tell the Post that things do not become true just because Microsoft or some other major corporation assert them. This problem pervades an article on efforts by the entertainment industry to force Internet companies to help them police their copyrights.
The article refers to the material in question as being pirated. This is in fact in dispute. In many cases, for example countries where the specific material involved is not protected by national copyright law, it is wrong to claim that the material is “pirated.” It is simply unauthorized. The Post should have used this term throughout the piece, since it has certainly has no reason whatsoever to believe that all the material in question will in fact have been posted in violation of copyright.
It would have been helpful to include some economic analysis in this piece. It tells readers that the industry groups claim that they are losing $135 billion a year due to the circulation of unauthorized copies of their work. If this is true, under standard economic assumptions, the loss to consumers from enforcing copyrights would likely be several times larger.
It is also striking that the Post did not use the dichotomy of big government versus the market that it so often throws into its news articles. In this case, we are discussing a law that involves really big government, since it will impose major sanctions on companies that don’t in effect act as agents of the government in policing what people post on the web.
Someone has to tell the Post that things do not become true just because Microsoft or some other major corporation assert them. This problem pervades an article on efforts by the entertainment industry to force Internet companies to help them police their copyrights.
The article refers to the material in question as being pirated. This is in fact in dispute. In many cases, for example countries where the specific material involved is not protected by national copyright law, it is wrong to claim that the material is “pirated.” It is simply unauthorized. The Post should have used this term throughout the piece, since it has certainly has no reason whatsoever to believe that all the material in question will in fact have been posted in violation of copyright.
It would have been helpful to include some economic analysis in this piece. It tells readers that the industry groups claim that they are losing $135 billion a year due to the circulation of unauthorized copies of their work. If this is true, under standard economic assumptions, the loss to consumers from enforcing copyrights would likely be several times larger.
It is also striking that the Post did not use the dichotomy of big government versus the market that it so often throws into its news articles. In this case, we are discussing a law that involves really big government, since it will impose major sanctions on companies that don’t in effect act as agents of the government in policing what people post on the web.
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George Will gave a seriously inaccurate accounting of history in his Washington Post column today. He told readers:
“Sensible people who remember the last grand budget bargain will be dry-eyed about not having another now. Although only 21 of the 242 Republicans in the House and eight of 47 Republicans in the Senate were on Capitol Hill in 1990, everyone there should remember the results of that year’s budget agreement, wherein President George H.W. Bush jettisoned his “no new taxes” pledge: Taxes increased. So did spending. And the deficit. Economic growth decreased.”
That’s not quite right. The economy actually slid into recession in June of 1990. The budget deal wasn’t made until October of 1990. It would take a really really bad deal to slow growth four months before it had been made.
Will also includes a chart that shows projected spending growth with and without a sequester. The point is to imply that there will be large growth in spending regardless even if money is sequestered.
Economists would ordinarily adjust for inflation, which is projected to be around 30 percent in total over the next decade. Perhaps the Post still pays Will the same amount it did in 2001, but wages in general typically rise at least in step with inflation.
Economists would also typically adjust for growth in the economy. If the economy is 30 percent larger (which is the projection), then we would expect to spend roughly 30 percent more, after adjusting for inflation, educating our kids, maintaining and improving our infrastructure, and on other public needs. Apparently, Mr. Will believes that a huge country like the United States does not need to spend any more on education than a small poor country like Haiti. Otherwise he would discuss these sums as shares of GDP, as would any serious analyst.
George Will gave a seriously inaccurate accounting of history in his Washington Post column today. He told readers:
“Sensible people who remember the last grand budget bargain will be dry-eyed about not having another now. Although only 21 of the 242 Republicans in the House and eight of 47 Republicans in the Senate were on Capitol Hill in 1990, everyone there should remember the results of that year’s budget agreement, wherein President George H.W. Bush jettisoned his “no new taxes” pledge: Taxes increased. So did spending. And the deficit. Economic growth decreased.”
That’s not quite right. The economy actually slid into recession in June of 1990. The budget deal wasn’t made until October of 1990. It would take a really really bad deal to slow growth four months before it had been made.
Will also includes a chart that shows projected spending growth with and without a sequester. The point is to imply that there will be large growth in spending regardless even if money is sequestered.
Economists would ordinarily adjust for inflation, which is projected to be around 30 percent in total over the next decade. Perhaps the Post still pays Will the same amount it did in 2001, but wages in general typically rise at least in step with inflation.
Economists would also typically adjust for growth in the economy. If the economy is 30 percent larger (which is the projection), then we would expect to spend roughly 30 percent more, after adjusting for inflation, educating our kids, maintaining and improving our infrastructure, and on other public needs. Apparently, Mr. Will believes that a huge country like the United States does not need to spend any more on education than a small poor country like Haiti. Otherwise he would discuss these sums as shares of GDP, as would any serious analyst.
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Most major news outlets have done pieces touting the jobs boom associated with fracking. The story goes that allowing this relatively new form of drilling will both lower energy prices in the United States and also lead to an employment boom in the regions where the drilling takes place. And, how do we know there will be a boom? Well, the industry said so.
It turns out that the employment boom ain’t all it is cracked up to be. The environmental group, Food and Water Watch, released a report yesterday that examined job projections for New York, which is considering ending a ban on fracking. The industry had projected that fracking in western New York would create more than 60,000 new jobs. Food and Water watch looked at the experience in the adjacent Pennsylvania counties, which allow fracking, and concluded that the potential job gains for New York are one-tenth as large, or about 6,000. And, this is before taking account of any jobs that may be lost due to environmental damage (e.g. in tourism associated with fishing, hunting, and camping).
In short, for these counties there is not much of an issue of jobs versus the environment. The number of potential jobs at stake are relatively few and most are likely to go to people living outside the region in any case.
[Disclosure: The researcher for this report was my wife, Helene Jorgensen.]
Most major news outlets have done pieces touting the jobs boom associated with fracking. The story goes that allowing this relatively new form of drilling will both lower energy prices in the United States and also lead to an employment boom in the regions where the drilling takes place. And, how do we know there will be a boom? Well, the industry said so.
It turns out that the employment boom ain’t all it is cracked up to be. The environmental group, Food and Water Watch, released a report yesterday that examined job projections for New York, which is considering ending a ban on fracking. The industry had projected that fracking in western New York would create more than 60,000 new jobs. Food and Water watch looked at the experience in the adjacent Pennsylvania counties, which allow fracking, and concluded that the potential job gains for New York are one-tenth as large, or about 6,000. And, this is before taking account of any jobs that may be lost due to environmental damage (e.g. in tourism associated with fishing, hunting, and camping).
In short, for these counties there is not much of an issue of jobs versus the environment. The number of potential jobs at stake are relatively few and most are likely to go to people living outside the region in any case.
[Disclosure: The researcher for this report was my wife, Helene Jorgensen.]
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Morning Edition did a three part series featuring segments on Ayn Rand, Friedrich Hayek, and John Maynard Keynes. In addition to the fact that two of these three are extreme conservatives, the pieces create a false symmetry on the influence of these three thinkers.
Keynes’ work provides the basis for modern macroeconomics. The vast majority of the economics profession works within a framework that was established by Keynes, regardless of their political leanings. The influence of Rand and Hayek is nowhere near comparable.
Morning Edition did a three part series featuring segments on Ayn Rand, Friedrich Hayek, and John Maynard Keynes. In addition to the fact that two of these three are extreme conservatives, the pieces create a false symmetry on the influence of these three thinkers.
Keynes’ work provides the basis for modern macroeconomics. The vast majority of the economics profession works within a framework that was established by Keynes, regardless of their political leanings. The influence of Rand and Hayek is nowhere near comparable.
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The NYT had a misleading piece contrasting the success of Germany with the difficulties facing the countries of southern Europe. The problem is not just a question of southern European countries emulating Germany, as the article implies. The problem is that Germany has acted to shut off the adjustment mechanisms that would allow southern Europe to accomplish this task
At the moment, southern Europe is not competitive with Germany, which is the cause of its large trade deficits. If these countries were not in the euro, they would simply devalue their currency. However, the euro rules out this option to restoring competitiveness.
The alternative would be to have a lower inflation rate than Germany. However, because the European Central Bank (ECB) has committed to sustaining an inflation rate of just 2.0 percent in the euro zone as a whole, there is very little that the southern countries can gain by having a lower positive inflation rate. Their only route within the euro to regaining competitiveness is to have a period of deflation. This is incredibly costly in terms of high unemployment and lost output. (Latvia is going this route now and has an unemployment rate in the high teens, after earlier hitting 20 percent.)
The German position on the heavily indebted southern countries is absurd. It wants to maintain its huge trade surplus with these countries, while still insisting that they make good on their debts. This is like a store owner insisting that his customers keep buying more from him, while still paying off their debts. This is not just a question of southern Europeans being resentful or jealous, Germany is asking for something that is impossible.
The article also likely misled many readers on Germany’s growth, telling readers that it grew 0.5 percent in the third quarter. This number is a quarterly growth rate. It is standard in the United States to express growth as an annual rate. Germany’s growth in the third quarter was approximately 2.0 percent at an annual rate.
The NYT had a misleading piece contrasting the success of Germany with the difficulties facing the countries of southern Europe. The problem is not just a question of southern European countries emulating Germany, as the article implies. The problem is that Germany has acted to shut off the adjustment mechanisms that would allow southern Europe to accomplish this task
At the moment, southern Europe is not competitive with Germany, which is the cause of its large trade deficits. If these countries were not in the euro, they would simply devalue their currency. However, the euro rules out this option to restoring competitiveness.
The alternative would be to have a lower inflation rate than Germany. However, because the European Central Bank (ECB) has committed to sustaining an inflation rate of just 2.0 percent in the euro zone as a whole, there is very little that the southern countries can gain by having a lower positive inflation rate. Their only route within the euro to regaining competitiveness is to have a period of deflation. This is incredibly costly in terms of high unemployment and lost output. (Latvia is going this route now and has an unemployment rate in the high teens, after earlier hitting 20 percent.)
The German position on the heavily indebted southern countries is absurd. It wants to maintain its huge trade surplus with these countries, while still insisting that they make good on their debts. This is like a store owner insisting that his customers keep buying more from him, while still paying off their debts. This is not just a question of southern Europeans being resentful or jealous, Germany is asking for something that is impossible.
The article also likely misled many readers on Germany’s growth, telling readers that it grew 0.5 percent in the third quarter. This number is a quarterly growth rate. It is standard in the United States to express growth as an annual rate. Germany’s growth in the third quarter was approximately 2.0 percent at an annual rate.
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Who can blame him, after all it is hard to get news when you’re buried away in the middle of Washington, DC. Samuelson claims that Europe can’t bail itself out. He calls on the IMF to come to the rescue — at the cost of dismantling Europe’s welfare state.
Of course there is nothing wrong with Europe’s welfare state, as everyone who bothers to look at the data knows. In fact the troubled countries have the weakest welfare states in Europe. The ones with the strongest welfare states, Denmark, Sweden, the Netherlands, and Germany, are doing relatively well.
It is also the case that Europe has plenty of money to bail itself out, it just needs the European Central Bank (ECB) to backstop the debt of the troubled economies. But the folks at Fox on 15th Street, where the guiding philosophy is that a dollar in a worker’s pocket is a dollar that could be in a rich person’s pocket, are so committed to destroying the welfare state that they are prepared to pretend that the ECB does not exist.
The point here is that the problems facing the euro zone today are primarily demand side. If someone from Mars landed in the euro zone with 600 billion euros (roughly 6 percent of GDP) and started spending them all over the place, the main effect would be to increase demand and employment. This would raise tax revenue and reduce transfer payments, alleviating the budget problems facing euro zone countries.
By contrast, the burden of an excessive welfare state is a supply side story. The generosity of benefits discourages people from working, reducing the supply of labor. In addition, the money dished out by governments in benefits creates excess demand, leading to inflation. This story does not at all describe the euro zone countries at present.
Who can blame him, after all it is hard to get news when you’re buried away in the middle of Washington, DC. Samuelson claims that Europe can’t bail itself out. He calls on the IMF to come to the rescue — at the cost of dismantling Europe’s welfare state.
Of course there is nothing wrong with Europe’s welfare state, as everyone who bothers to look at the data knows. In fact the troubled countries have the weakest welfare states in Europe. The ones with the strongest welfare states, Denmark, Sweden, the Netherlands, and Germany, are doing relatively well.
It is also the case that Europe has plenty of money to bail itself out, it just needs the European Central Bank (ECB) to backstop the debt of the troubled economies. But the folks at Fox on 15th Street, where the guiding philosophy is that a dollar in a worker’s pocket is a dollar that could be in a rich person’s pocket, are so committed to destroying the welfare state that they are prepared to pretend that the ECB does not exist.
The point here is that the problems facing the euro zone today are primarily demand side. If someone from Mars landed in the euro zone with 600 billion euros (roughly 6 percent of GDP) and started spending them all over the place, the main effect would be to increase demand and employment. This would raise tax revenue and reduce transfer payments, alleviating the budget problems facing euro zone countries.
By contrast, the burden of an excessive welfare state is a supply side story. The generosity of benefits discourages people from working, reducing the supply of labor. In addition, the money dished out by governments in benefits creates excess demand, leading to inflation. This story does not at all describe the euro zone countries at present.
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Morning Edition included a discussion this morning (no link yet) with WSJ economics editor David Wessel and the Economist’s economics editor Zanny Mintos Beddes. When the discussion turned to housing, David Wessel said that in retrospect we underestimated the extent to which housing would be a drag on the economy.
Actually, those who understood the housing market were saying at the beginning of the downturn and before that the collapse of the housing bubble would be a serious and longterm drag on the economy. It was easy to see that the loss of $8 trillion in housing wealth would substantially reduce consumption and that the enormous overbuilding during the boom was going to lead to a prolonged period of depressed construction. Wessel simply failed to study the factors driving the economy. There was no need for hindsight on this one.
At one point Zanny Mintos Beddes held out the possibility that resurgent residential construction might provide a boost to the economy in the near future. That seem unlikely since the vacancy rate is still near record highs.
[I just stumbled onto this one by chance. People who did their homework did not need hindsight.]
Morning Edition included a discussion this morning (no link yet) with WSJ economics editor David Wessel and the Economist’s economics editor Zanny Mintos Beddes. When the discussion turned to housing, David Wessel said that in retrospect we underestimated the extent to which housing would be a drag on the economy.
Actually, those who understood the housing market were saying at the beginning of the downturn and before that the collapse of the housing bubble would be a serious and longterm drag on the economy. It was easy to see that the loss of $8 trillion in housing wealth would substantially reduce consumption and that the enormous overbuilding during the boom was going to lead to a prolonged period of depressed construction. Wessel simply failed to study the factors driving the economy. There was no need for hindsight on this one.
At one point Zanny Mintos Beddes held out the possibility that resurgent residential construction might provide a boost to the economy in the near future. That seem unlikely since the vacancy rate is still near record highs.
[I just stumbled onto this one by chance. People who did their homework did not need hindsight.]
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That’s the question millions are asking. In an article on the supercommittee this morning we find a sentence like:
“Republicans indicated a willingness to do so [raise more revenue], aides said, but only in exchange for additional reductions to soaring Social Security and Medicare costs (emphasis added).”
A real newspaper would have just said that the Republicans were demanding “additional reductions in Social Security and Medicare costs.” That would provide the same information as the Post’s sentence in less space and without the editorializing.
That’s the question millions are asking. In an article on the supercommittee this morning we find a sentence like:
“Republicans indicated a willingness to do so [raise more revenue], aides said, but only in exchange for additional reductions to soaring Social Security and Medicare costs (emphasis added).”
A real newspaper would have just said that the Republicans were demanding “additional reductions in Social Security and Medicare costs.” That would provide the same information as the Post’s sentence in less space and without the editorializing.
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The NYT reported that the supercommittee remains deadlocked on taxes. It reports that Republicans are willing to agree to $250-$300 billion in tax increases by eliminating loopholes in exchange for reducing the top tax rate to 28 percent instead of allowing it to rise back to the Clinton era level of 39.6 percent. While the piece notes that this would be a windfall for high income taxpayers, it would have been worth reminding readers that the sums being proposed are less than 2 percent of the projected $17 trillion adjusted gross income of the richest 1 percent over the next decade. By contrast, there is bi-partisan support for cutting the annual Social Security cost of living adjustment by an amount that would reduce average benefits by close to 3 percent.
The piece including comments from Morgan Stanley director Erskine Bowles without identifying his association with the giant Wall Street bank.
The NYT reported that the supercommittee remains deadlocked on taxes. It reports that Republicans are willing to agree to $250-$300 billion in tax increases by eliminating loopholes in exchange for reducing the top tax rate to 28 percent instead of allowing it to rise back to the Clinton era level of 39.6 percent. While the piece notes that this would be a windfall for high income taxpayers, it would have been worth reminding readers that the sums being proposed are less than 2 percent of the projected $17 trillion adjusted gross income of the richest 1 percent over the next decade. By contrast, there is bi-partisan support for cutting the annual Social Security cost of living adjustment by an amount that would reduce average benefits by close to 3 percent.
The piece including comments from Morgan Stanley director Erskine Bowles without identifying his association with the giant Wall Street bank.
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