The NYT had an article about Germany’s relatively healthy economy, which is now growing at a healthy pace largely as the result of a surge of exports. The article also notes the effectiveness of Germany’s work sharing policy which provides tax credits to companies for shortening hours rather than laying off workers. This policy has been even more effective than the article implies.
While the article tells readers that Germany’s unemployment rate is 7.6 percent, this is the German government measure. This measure counts people who want full-time work but only have part-time jobs as being unemployed. By contrast, the OECD’s methodology, which is similar to the one used by the United States, shows a German unemployment rate of 7.0 percent, roughly the same as before the downturn.
The NYT had an article about Germany’s relatively healthy economy, which is now growing at a healthy pace largely as the result of a surge of exports. The article also notes the effectiveness of Germany’s work sharing policy which provides tax credits to companies for shortening hours rather than laying off workers. This policy has been even more effective than the article implies.
While the article tells readers that Germany’s unemployment rate is 7.6 percent, this is the German government measure. This measure counts people who want full-time work but only have part-time jobs as being unemployed. By contrast, the OECD’s methodology, which is similar to the one used by the United States, shows a German unemployment rate of 7.0 percent, roughly the same as before the downturn.
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USA Today has a nice piece showing stimulus spending by state. It shows that there is no link between spending and unemployment, in large part because much of the funding goes through preset formulas that do not respond to current unemployment rates.
USA Today has a nice piece showing stimulus spending by state. It shows that there is no link between spending and unemployment, in large part because much of the funding goes through preset formulas that do not respond to current unemployment rates.
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The media have played a huge role in fundamentally misrepresenting trade policy and thereby larger economic policy. As a result, the public is quite confused on key economic issues.
This is brought home in an article today about a study showing that foreign-born foreign-trained doctors perform slightly better than doctors who were born and trained in the United States. The article notes in passing that an extensive set of tests required for licensing make it difficult for foreign doctors to practice in the United States. The number of foreign medical residents who can enter the United States is also tightly constrained.
This suggests that the United States could get many more highly qualified foreign doctors if it eliminated these barriers so that they only ensured the quality of training. (It is easy to design mechanisms to ensure that the physicians’ home countries benefit from having their doctors’ practice in the United States, so this need not be a concern.)
Remarkably, this point is never raised explicitly as an issue of trade and economics in this or other articles. Trade policy is usually only discussed in the context of trade agreements such as NAFTA (which are wrongly labeled “free-trade” agreements) even though the barriers that prevent foreign professionals like doctors from practicing in the United States cost our economy tens or hundreds of times as much as the money at stake in these agreements.
The failure to seriously discuss trade in the media leads the public to have the misleading view that less-educated workers, like those in manufacturing, can’t compete in the modern world economy, while the most highly-educated workers have the skills and ability to prosper. In reality, the most highly educated workers prosper because they have the political power to limit the number of Chinese, Indian and other foreigners who are allowed to compete with them, unlike manufacturing workers.
If there was genuine free-trade in highly paid professional services then doctors, lawyers, and economists would see the same downward pressure on their wages as autoworkers and textile workers. The gains to the economy from lower prices for health care and other services that would result from free trade in highly-paid professional services would be enormous, but it is as hard for most economists to notice these gains as it is for them to see an $8 trillion housing bubble.
The media have played a huge role in fundamentally misrepresenting trade policy and thereby larger economic policy. As a result, the public is quite confused on key economic issues.
This is brought home in an article today about a study showing that foreign-born foreign-trained doctors perform slightly better than doctors who were born and trained in the United States. The article notes in passing that an extensive set of tests required for licensing make it difficult for foreign doctors to practice in the United States. The number of foreign medical residents who can enter the United States is also tightly constrained.
This suggests that the United States could get many more highly qualified foreign doctors if it eliminated these barriers so that they only ensured the quality of training. (It is easy to design mechanisms to ensure that the physicians’ home countries benefit from having their doctors’ practice in the United States, so this need not be a concern.)
Remarkably, this point is never raised explicitly as an issue of trade and economics in this or other articles. Trade policy is usually only discussed in the context of trade agreements such as NAFTA (which are wrongly labeled “free-trade” agreements) even though the barriers that prevent foreign professionals like doctors from practicing in the United States cost our economy tens or hundreds of times as much as the money at stake in these agreements.
The failure to seriously discuss trade in the media leads the public to have the misleading view that less-educated workers, like those in manufacturing, can’t compete in the modern world economy, while the most highly-educated workers have the skills and ability to prosper. In reality, the most highly educated workers prosper because they have the political power to limit the number of Chinese, Indian and other foreigners who are allowed to compete with them, unlike manufacturing workers.
If there was genuine free-trade in highly paid professional services then doctors, lawyers, and economists would see the same downward pressure on their wages as autoworkers and textile workers. The gains to the economy from lower prices for health care and other services that would result from free trade in highly-paid professional services would be enormous, but it is as hard for most economists to notice these gains as it is for them to see an $8 trillion housing bubble.
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The NYT had an article on the hostility being directed toward the head of Hungary’s central bank. The article implies that such hostility is misdirected, beginning the piece with the comment: “it’s not easy being a central banker in Europe — especially during the biggest economic crisis in a generation”
This comment is sort of like saying that it’s not easy to be head of BP, especially in the middle of the largest oil spill in the history of the world. The reason that we are having the economic crisis is because of the failure of Europe’s central bankers to notice the huge housing bubbles that were distorting economies throughout Europe and much of the world. If Europe’s central bankers had been doing their job competently they would have acted to rein in these bubbles before they grew large enough to endanger the economy. Instead, they were obsessed with reaching their 2.0 percent inflation target.
The NYT had an article on the hostility being directed toward the head of Hungary’s central bank. The article implies that such hostility is misdirected, beginning the piece with the comment: “it’s not easy being a central banker in Europe — especially during the biggest economic crisis in a generation”
This comment is sort of like saying that it’s not easy to be head of BP, especially in the middle of the largest oil spill in the history of the world. The reason that we are having the economic crisis is because of the failure of Europe’s central bankers to notice the huge housing bubbles that were distorting economies throughout Europe and much of the world. If Europe’s central bankers had been doing their job competently they would have acted to rein in these bubbles before they grew large enough to endanger the economy. Instead, they were obsessed with reaching their 2.0 percent inflation target.
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Andrew Ross Sorkin argued that assessing fines against companies for misleading shareholders is unfair because it punishes the shareholders a second time. Actually, if shareholders know that their companies will be punished, hurting its stock price, if its top executives lie about the company’s performance, then they have more incentive to ensure that they do not get lying executives. This is a desirable outcome since their lying will distort stock prices, and in principle, lead to misplaced investment.
Of course if shareholders really have very little control over companies then this increased incentive will have little effect. However, that would be a very serious indictment of the system of corporate governance.
Andrew Ross Sorkin argued that assessing fines against companies for misleading shareholders is unfair because it punishes the shareholders a second time. Actually, if shareholders know that their companies will be punished, hurting its stock price, if its top executives lie about the company’s performance, then they have more incentive to ensure that they do not get lying executives. This is a desirable outcome since their lying will distort stock prices, and in principle, lead to misplaced investment.
Of course if shareholders really have very little control over companies then this increased incentive will have little effect. However, that would be a very serious indictment of the system of corporate governance.
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The NYT headline told readers that, “Bernanke Says Rising Wages Will Lift Spending.” Real wages have been virtually unchanged over the last year. Let’s hope that the NYT got the story wrong and that Bernanke knows this.
The NYT headline told readers that, “Bernanke Says Rising Wages Will Lift Spending.” Real wages have been virtually unchanged over the last year. Let’s hope that the NYT got the story wrong and that Bernanke knows this.
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In an article reporting on a study that concluded that the health care reform bill will lead to substantial savings for Medicare, the Washington Post told readers:
“critics say trust fund solvency will only improve on paper, since actual savings from the Medicare cuts would have been spent to provide coverage for more than 30 million uninsured Americans.”
This is a real trip to bizzaro world. The Medicare trust fund is an accounting entity. Improvements can by definition only occur on paper, or more accurately in computer entries. It is not clear what the Post thinks it means with this statement.
In an article reporting on a study that concluded that the health care reform bill will lead to substantial savings for Medicare, the Washington Post told readers:
“critics say trust fund solvency will only improve on paper, since actual savings from the Medicare cuts would have been spent to provide coverage for more than 30 million uninsured Americans.”
This is a real trip to bizzaro world. The Medicare trust fund is an accounting entity. Improvements can by definition only occur on paper, or more accurately in computer entries. It is not clear what the Post thinks it means with this statement.
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That’s right folks, you get to say whatever you want in the media now to further the cause of cutting Social Security. Today on This Week, Cokie Roberts told viewers that:
“You could close this capital or turn it into condos and you could close down every domestic program that we have and you would still have a deficit because of Social Security and Medicare and interest on the national debt.”
Well that’s not quite right, Social Security is running an annual surplus. The money that program takes in each year in taxes and interest on its bonds exceeds what is being paid out in benefits. It’s not clear what Ms. Roberts had in mind when blaming Social Security for the deficit, but it has nothing to do with reality.
Thanks to Gene Devaux who watched so I wouldn’t have to.
That’s right folks, you get to say whatever you want in the media now to further the cause of cutting Social Security. Today on This Week, Cokie Roberts told viewers that:
“You could close this capital or turn it into condos and you could close down every domestic program that we have and you would still have a deficit because of Social Security and Medicare and interest on the national debt.”
Well that’s not quite right, Social Security is running an annual surplus. The money that program takes in each year in taxes and interest on its bonds exceeds what is being paid out in benefits. It’s not clear what Ms. Roberts had in mind when blaming Social Security for the deficit, but it has nothing to do with reality.
Thanks to Gene Devaux who watched so I wouldn’t have to.
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Morning Edition told listeners that the shadow inventory of foreclosed homes will keep the housing market depressed for several years to come. Actually house prices are not depressed. House prices are still 15-20 percent above their trend levels. The housing market will not be back to normal until house prices fall back to a more sustainable level.
This is really getting annoying. NPR completely missed the housing bubble. During its run-up they relied almost exclusively on economists who did not have a clue, many of whom were on the industry payroll. Given the enormous damage that has been done to the country by the collapse of this bubble, can’t NPR make a point even now of finding someone who knows something about the housing market? Isn’t that what their reporters are paid for?
Morning Edition told listeners that the shadow inventory of foreclosed homes will keep the housing market depressed for several years to come. Actually house prices are not depressed. House prices are still 15-20 percent above their trend levels. The housing market will not be back to normal until house prices fall back to a more sustainable level.
This is really getting annoying. NPR completely missed the housing bubble. During its run-up they relied almost exclusively on economists who did not have a clue, many of whom were on the industry payroll. Given the enormous damage that has been done to the country by the collapse of this bubble, can’t NPR make a point even now of finding someone who knows something about the housing market? Isn’t that what their reporters are paid for?
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The NYT had a piece comparing efforts to detect financial crises to efforts to detect earthquakes. This implies that some fundamental new methodology is needed.
In fact, the economic crisis was entirely predictable and predicted by people who understand economics. The more obvious problem is the incentive structure within the economics profession. It provides economists with no incentive to break with conventional wisdom even when it is obviously wrong and provides no sanction against those whose failure to break with conventional wisdom led to disastrous consequences for the economy and the country.
Unless this incentive structure is changed, no improvements in methodology will make any difference at all.
The NYT had a piece comparing efforts to detect financial crises to efforts to detect earthquakes. This implies that some fundamental new methodology is needed.
In fact, the economic crisis was entirely predictable and predicted by people who understand economics. The more obvious problem is the incentive structure within the economics profession. It provides economists with no incentive to break with conventional wisdom even when it is obviously wrong and provides no sanction against those whose failure to break with conventional wisdom led to disastrous consequences for the economy and the country.
Unless this incentive structure is changed, no improvements in methodology will make any difference at all.
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