Dean Baker
Truthout, April 29, 2019

Hawaii Senator Brian Schatz recently introduced a bill proposing a 0.1 percent tax on financial transactions. This means that when people trade a share of stock or a bond, they would pay a tax rate of 0.1 percent ($1 on $1,000), on their trades. According to the Congressional Budget Office, this tax can raise more than $80 billion a year in revenue, somewhat more than the entire annual budget for the food stamp program.

Not surprisingly, the financial industry doesn’t like the idea. It has argued that this tax would be a big hit to retirees and pension funds. While it is understandable that the industry would try to raise such fears to protect its profits, its claims have little basis in reality, as a bit of arithmetic can quickly show.

Suppose that a worker has $100,000 in a retirement fund. If 40 percent of the fund turns over every year, then this worker would be a 0.1 percent tax on the $40,000, if all of the tax is passed on to investors. This is a strong assumption, since it is likely that the industry would have to absorb some of the cost of the tax in lower fees, but even in this extreme case where they can make investors pay the full tax, this worker would be paying $40 a year from their retirement account to the government as a result of the tax.

While no one will be happy to pay an extra $40 a year in taxes, it is worth putting this in some context. The average fees charged by the financial industry to manage a 401(k) account are in the neighborhood of 1.0 percent annually. Many charge as much as 1.5 percent or even 2.0 percent.

But if we use this 1.0 percent figure, this worker with $100,000 in their retirement account is paying the financial industry $1,000 a year from their account. By comparison, the $40 from the financial transactions tax may not seem like a very big deal.

April 26, 2019

April 26, 2019 (GDP Byte)

CEPR regularly publishes a curated collection of original research from academic institutions and nonprofits on the state of the US labor market. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people's lives.

The Brookings Institution

Meet the millions of young adults who are out of work

An estimated 17 percent of young people aged 18 to 24 years old find themselves out of work in midsize to large cities in the US—about 2.3 million young people and potential workers. The authors use cluster analysis to partition out-of-work young adults into five groups which are arranged by educational attainment, school enrollment, English language proficiency, family status, and other characteristics. The report offers recommendations for state, local, civic, and institutional leaders to help all young people make the transition into the labor force successfully.

(This post originally appeared on my Patreon page.) U.S. trade policy is truly fascinating. Probably more than in any other area of public policy, trade agreements are structured by corporate interests behind closed doors. Then when a deal is produced, the establishment media and economists insist that we have to support the deal behind the important principle of “free trade.” The opponents are treated as knuckle-dragging Neanderthals who just can’t understand how the economy works.

We got another episode in this long-running show last week when the United States International Trade Commission (USITC) came out with its assessment of the United States, Mexico, Canada Agreement (USMCA), also known as the new NAFTA. It came as a surprise to virtually no one that the USITC study showed economic gains from the deal. The study projected that the deal would lead to an increase in GDP of 0.35 percent when its effects are fully felt. However, the real impressive part of the story is how it got this result.

Before getting to the particulars, it’s worth putting some perspective on the character of the report. The USITC was obviously determined to make the USMCA look good. One reason this is clear is the failure to put a date for the year for which their projections are made. The model that the USITC used to project gains, the model from the Global Trade Analysis Project (GTAP), assumes a long period through which the economy gradually adjusts to the changes put in place from a trade deal. The projected impact refers to the end year, which is around 16 years in the future.[1]

Incredibly, the UISTC study projecting the impact of USMCA neglects to mention the end year for its projections, which presumably would be something like 2034. The end year is presumably left out because a gain of 0.35 percentage points of GDP over sixteen years looks rather pathetic. It comes to just over 0.02 percentage points a year, an increment that would be essentially invisible.

April 2019, Mark Weisbrot and Jeffrey Sachs

Dean Baker
Truthout, April 22, 2019

It’s widely understood that private equity firms make money for themselves and their investors by loading the companies they buy with debt, selling off assets, and gaming the tax system. But, there is another, less well-known way that private equity enric

Economists pride themselves on being the serious social science, the one most deserving of status as an actual science. I will let others make the comparative assessment, but there is an awful lot of nonsense that passes as serious analysis within economics. For cheap fun, I thought I would use a nice spring afternoon to highlight some of my favorites.

Myth 1: The Robots Are Taking All the Jobs

The "robots taking the jobs" story gets top place both because it is completely ridiculous and it is widely taken seriously in policy discussions. The story is ridiculous because it is directly contradicted by the data. Robots taking all the jobs is a story of rapid productivity growth. It means that we can produce the same output with fewer workers because the robots are doing work that used to be done by people. That is the definition of productivity growth.

But the productivity data refuse to cooperate with this story. This is not hard to discover. The Bureau of Labor Statistics releases data on productivity every quarter. The data show that productivity growth has been very weak in recent years, averaging just 1.3 percent annually since 2005. This compares to a rate of productivity growth of 3.0 percent in both the period from 1995 to 2005 and the long Golden Age from 1947 to 1973.

The job-killing robots story is sometimes diverted into a scenario that is just around the corner instead of being here today. Of course, we can’t definitely rule out that at some point in the future productivity will not accelerate sharply, but it is worth noting that this pickup does not seem to be on the immediate horizon. Investment is not especially high as a share of GDP, averaging 13.4 percent over the last three years. That compares to 14.2 percent from 1999 to 2001, and 14.4 percent from 1980 to 1982, its post-war peak.

Rebecca Watts
Animal Político, 15 de abril, 2019

Deborah JamesSouth-North Development Monitor, April 16, 2019

The FAMILY Act was reintroduced in the 116th Congress by Kirsten Gillibrand in the Senate and Rosa DeLauro in the House. It would provide workers with income when they need to take time off for their own health including recovery from childbirth, to care

Dean Baker
Truthout, April 15, 2019