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Article Artículo

Technology

The Old Blame Technology for Inequality Story

There are a lot of economists who are determined to say that technology is responsible for inequality rather than policy. There are many parts to this story that seem absurd on their face.

Are doctors, dentists and lawyers really whizs at technology? These occupations make up a very large share of the 1 percent. They sustain their income the old-fashioned way, they have the government arrest the competition. When more middle income workers like nurses and computer engineers start to see their pay rise, their employers run to the government whining about shortages so that they can bring in foreign workers to keep down wages. 

The financial sector has become a fraud factory. Top executives at banks can pocket tens or even hundreds of millions of dollars off various illegal schemes and never fear more than repaying a portion in penalties. And of course the laws that protect workers' right to organize unions have become a joke, while the laws that protect employers from organized workers remain sacred. (Union officials who openly support a secondary strike don't risk a slap on the wrist from the National Labor Relations Board, they go to jail.)  I could go on (and do).

But there is a big market for economists who produce stories saying that the problem is technology, so there will be economists who respond to the demand. Brad Plummer gives us a couple of examples in a recent blogpost.

The first is from Catherine Mulbrandon of Visualizing Economics. She gives us a graph which is supposed to show us that the industries that pay in the middle of the wage distribution are shrinking, while industries at the top and bottom are expanding. This is the story of wage polarization, with a disappearing middle.

Perhaps I have a problem with my eyesight, but it's hard to see that story in the graph. The industry with the biggest increase in employment over the period from 2001 to 2011 is health care and social services, which sits almost directly on top of the line showing the average for all industries. Manufacturing, which is somewhat above the average pay rate, shows a big decline as we all know. However the industry grouping "professional, scientific, and technical services," which is only slightly higher on the pay scale, is number 3 in job growth over this period.

Retail, which is definitely towards the lower end, is a big source of job loss over this period. Education services, which is closer to the average wage than manufacturing, is a big job gainer. If wage polarization is going on, you won't know it from this graph.

Dean Baker / August 29, 2013

Article Artículo

Affordable Care Act

The Numbers Are In: Obamacare Increased Percentage of People Working 26-29 Hours a Week

Okay, all of you socialist nationalized health care loving Obama backers are going to have to own up to the evils of the Affordable Care Act (ACA). We now have the full six months of data for the first half of 2013. This is the period when employers thought they would be subject to sanctions for not covering workers who put in 30 hours a week or more. (The administration announced the suspension of this provision on July 2.) 

It turns out that the percentage of workers who are putting in 26-29 hours (just under the 30-hour cutoff) is up. The share went up from 0.61 percent of the workforce in 2012 to 0.64 percent of the workforce in 2013, an increase that corresponds to slightly more than 40,000 workers who have work schedules that put them just below the threshold as shown in the table below.

Dean Baker and Helene Jorgensen / August 26, 2013

Article Artículo

The NYT Doesn't Like the French Welfare State

Earlier this year the NYT gained considerable notoriety for claiming the Danish welfare state was on its last legs. While the article included several stories that made this point, the data refused to cooperate. By almost any measure Denmark's economy looks considerably stronger than the U.S. economy.

Having struck out in its effort to push its Danish welfare state scare story, it now appears to be turning its attention to France. An article in today's paper, which was headlined "a proud nation ponders how to halt its slow decline," told readers:

"Today, however, Europe is talking about “the French question”: can the Socialist government of President François Hollande pull France out of its slow decline and prevent it from slipping permanently into Europe’s second tier?

"At stake is whether a social democratic system that for decades prided itself on being the model for providing a stable and high standard of living for its citizens can survive the combination of globalization, an aging population and the acute fiscal shocks of recent years.

"Those close to Mr. Hollande say that he is largely aware of what must be done to cut government spending and reduce regulations weighing down the economy, and is carefully gauging the political winds. But what appears to be missing is the will; ..."

None of these assertions are backed up by any evidence. For example, "Europe" is clearly not talking about the "the French question." Unnamed individuals who the NYT views as important may be talking about the French question, but this is most definitely not a major topic of conversation for people across the continent. What the article is revealing is an agenda that a small group of people, presumably most of whom are wealthy and powerful, have for France.

In the same vein it later tells readers;

"There is a broad consensus that real social and structural renovation can be carried out only by the left."

It never reveals who is part of this "broad consensus." Obviously the consensus does not include the vast majority of French people who clearly do not want to see major changes to French society.

Dean Baker / August 25, 2013

Article Artículo

Jeff Bezos' Newspaper Runs Joke Front Page Story on Deficit

Those who hoped that Jeff Bezos takeover of the Washington Post would lead to a quick improvement in the quality of its budget reporting will be seriously disappointed by the paper's lead story today. The story bemoaned the fact that, "after six budget showdowns, big government is mostly unchanged" [the article's headline].

The article uses four metrics to measure the size of government, none of which would inform readers of anything. Its lead metric is spending in nominal dollars, which it tells us will be $3.455 trillion in fiscal 2013. It tells us that this is down by only a small amount from a "whopping $3.457 trillion" spent in 2010.

Incredibly, the article does not even adjust this spending amount for inflation. (The piece does briefly note later that this is a 5 percent decline adjusted for inflation.) Of course a serious analysis would have expressed spending as a share of GDP, which shows that spending dropped from 24.1 percent of GDP in 2010 to 21.5 percent of GDP in 2013. This decline in spending of 2.6 percentage points of GDP would be the equivalent of roughly $420 billion in today's economy.

Assuming a multiplier of 1.5, this reduction in spending has cost the economy more than $600 billion in annual output since there is no plausible story by which cuts in government spending lead to addition private sector demand in the current economic situation. (To be fair, there is a lot of vigorous handwaving on this topic by proponents of spending cuts.) That would translate into more than 5 million fewer jobs.

The piece goes on to tell us that Bezos' paper does not like government spending in general and in particular dislikes Social Security and Medicare. In terms of government spending the piece tells readers:

Dean Baker / August 25, 2013

Article Artículo

Honduras

Latin America and the Caribbean

World

What Makes Killings by Police in St. Lucia Different from Those in Honduras?

As we have previously described, members of Congress have called for suspension of U.S. aid to Honduras’ police and military over allegations – and evidence – of human rights abuses, including forced disappearances and extra-judicial killings. The U.S. State Department response has been one of deception and circumvention, with officials saying U.S. assistance to the Honduran police does not go to National Police Director Juan Carlos “El Tigre” Bonilla – at the same time that Honduran officials point out that Bonilla is of course in charge of all Honduran police officers.

It appears though that the State Department has no problem in halting support to rights-abusing police forces elsewhere when it wants. Reuters reported yesterday:

The United States has suspended assistance to the police department of the Caribbean island of St. Lucia as a result of allegations of serious human rights violations, the State Department confirmed on Thursday.

…

The allegations stem from 12 killings committed between 2010 and 2011, some of which were committed by an "ad hoc task force within the police department," a U.S. State Department Human Rights Report said.

The alleged extra-judicial killings stemmed from the circulation of a hit list targeting persons deemed to be criminals. Five suspects whose names were on that list were shot and killed during police operations.

CEPR / August 23, 2013