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Article Artículo

Ezra Klein Strikes Out Big on Immigration and Demographics (link fixed)

Ezra Klein usually can be counted on for good insights on politics and the economy, however today's piece on immigration is the sort of thing that could have been on a press release from Fix the Debt. The basic point is to tout the virtues of immigration. While there are benefits of immigration that Klein rightly highlights, much of the piece veers off into the sort of pablum readers expect from the non-Klein portions of the Post.

This is especially the case where Klein dives off into demographics.

"The economic case for immigration is best made by way of analogy. Everyone agrees that aging economies with low birth rates are in trouble; this, for example, is a thoroughly conventional view of Japan. It’s even conventional wisdom about the U.S. The retirement of the baby boomers is correctly understood as an economic challenge. The ratio of working Americans to retirees will fall from 5 to 1 today to  3 to 1 in 2050. Fewer workers and more retirees is tough on any economy."

Klein then adds, "there’s nothing controversial about that analysis."

Actually everything about that analysis is controversial, including the basic facts. (Actually, these are just wrong.) The current ratio of workers to retirees is 2.8 to 1, it hasn't been 5 to 1 since the early 1960s. It is projected to fall to 2.0 to 1 by the mid 2030s.

Dean Baker / February 02, 2013

Article Artículo

Economic Growth

Workers

Rising Inequality: Don't Blame the Robots

There is little dispute among economists about the sharp rise in inequality over the last three decades. According to the Congressional Budget Office, the top one percent's share of before-tax income roughly doubled between the late 1970s and the present -- from 10 percent to 20 percent. This gain came at the expense of the bottom 80 percent of the income distribution, who have seen little benefit from economic growth over this same period.

Economists generally agree about the facts on rising inequality. There are, however, enormous disagreements on the causes. The prevailing view within the profession attributes the rise in inequality primarily to technological change.

Is Rising Demanding for High-Skilled Workers Creating More Inequality?

The basic story is that computerization and other technological breakthroughs of the last three decades have displaced large numbers of relatively good paying jobs in manufacturing and elsewhere.

This loss of middle class jobs has forced formerly well-paid workers to crowd into occupations further down the wage scale, like retail trade and restaurant work. This has driven down wages for these workers in particular, and the occupations more generally. The result: the middle and bottom of the income distribution have seen relative declines in their wages because the demand for labor has simply not kept pace with the supply.

The most prominent proponent of this view is David Autor, an economics professor at M.I.T. His work purports to show a hollowing out of the middle, with demand increasing for workers in both high paid and low-paid occupations.

But while Autor's work has been widely accepted within the profession and in policy debates, not all of us buy it. In fact, my friends and colleagues Larry Mishel, John Schmitt, and Heidi Shierholz recently wrote a paper that challenges many of Autor's claims. They presented it at the annual economics meetings this month.

Dean Baker / February 01, 2013

Article Artículo

From Camp to Kanaan to One of Haiti’s First Sewage Treatment Plants

Port-au-Prince - It “shook the house, like this” he says, violently rocking back and forth, acting it out. He yelled to his wife to get out, grabbed the children and went to the street. “Ten minutes later it was,” he said, bringing his hands together, “flat.” With this, Sonny Jean’s post-earthquake story begins; three years later we’re speaking at one of Haiti’s first sewage treatment plants, located in Titanyen.

Sonny DINEPA
Sonny Jean, showing off the DINEPA sewage treatment plan in Titanyen; Hundreds of shelters dot the background in Kanaan.

Like many of those who lost their homes, Sonny settled with his family on the Champ de Mars, the public park in downtown Port-au-Prince across from where the national palace once stood, which later became home to at least 20,000 people. Sonny lived there with his family in a small shelter and “it was tough,” he said, adding, “it wasn’t the place I wanted to raise my family.” In December of 2010, a friend tried to convince him to move to a tract of land the government had declared to be of public utility. While at first skeptical of moving so far from downtown Port-au-Prince, he knew he couldn’t stay in the Champ de Mars camp either.

Eventually, he packed up his tent and what belongings had survived the earthquake and went with his wife and children to Kanaan, a vast expanse of land on a hillside about 20 km outside of Port-au-Prince. Like the majority of those who have left the camps, it wasn’t through a rental subsidy or because they were given a temporary shelter or had their home repaired. According to Sonny, he was the first to set up a tent so far west in the area, though he’s now joined by hundreds of others close by, and up to hundreds of thousands in all of Kanaan.

But life there is difficult and was especially in those early days. “I was lonely, man, scared,” he said.  With the wind whipping incessantly and no other families around, there were many restless nights.

Later, across the street from his new home, Sonny noticed some people starting to clear the land. He told his wife he was going to check it out; she was skeptical anything good would come of it. He went across the street, standing alone, just looking on. Eventually he heard someone, who seemed to be in charge, speaking Kreyol but “different than I speak it.” So he responded in English, which he had picked up in the years he had lived in the U.S. on a seaman’s visa. (Though he’d like to return to the U.S. someday, he hasn’t been able to get a new visa.)

The manager, an English speaker from another Caribbean island, was impressed by his English, and after speaking for awhile, offered him a job on the site.

It’s been many months since that chance encounter, and now, some nine months since Haiti’s second sewage treatment plant opened, he was showing the place off; the area where the trucks dump their waste water, the treatment ponds which the water filters in to, the area where they clean the trucks before they exist the plant and also where they hope to have a garden, where they can use the treated water for irrigation.

Jake Johnston / January 31, 2013

Article Artículo

Workers

Visualizing State Union Numbers

Last week, the Bureau of Labor statistics released its estimates for union members in the United States in 2012. CEPR published our own analysis of the numbers, including a breakdown of state union membership in the private and public sectors.

Early analysis has emphasized specific measures such as the implementation of so-called “right-to-work” legislation in Indiana or the attacks on public-sector bargaining in Wisconsin. But, a look at changes across the states shows some geographical patterns that cross state lines.

In the three maps below, the states shaded in red hues lost union members between 2011 and 2012; those in hues of blue saw gains. The darker the hue, the greater the gain or loss as measured in percent terms. Louisiana – in dark blue – saw the greatest overall gain with a 39 percent increase in total union members. Arkansas – in bright red – had the greatest decline, losing 21 percent of its union workers.

Click Maps for Larger Version

change-in-all-rate-percent-num-2013-01 change-in-private-sector-percent-num-2013-01 change-in-public-sector-percent-num-2013-01

The first map shows the percent change in all union members (that is, combining the public and private sector). The deepest reds – indicating the biggest losses – were concentrated in the center of the country, in states such as Wisconsin, Ohio, Indiana, Michigan, and Illinois. The biggest concentration of blue shades – where union membership grew most –was in the west (California, Hawaii, and Nevada) and the south (from New Mexico through Texas and Louisiana all the way to Georgia and South Carolina – though the union base in many of these states is, of course, small).

CEPR and Milla Sanes / January 31, 2013

Article Artículo

Turning Class War Into Generational War

Bloomberg made a serious effort to turn class war into generational war using a column by Evan Soltas that was cleverly titled “Don't Let Class Warfare Turn Into Generational Warfare.” The basic story in the piece is that the baby boomers are skipping into retirement leaving the generations that follow with a huge tab in the form of their Social Security and Medicare benefits. There are a lot of items that are not quite right in the piece which drive this conclusion.

First, the idea that baby boomers have not paid for their retirement is driven entirely by the Medicare side of the equation. Standard calculations of the net tax payments for Social Security show that most baby boomers will pay more in taxes than they receive in benefits.

The imbalance on the Medicare side stems from the fact that we pay twice as much per person for our health care as the average for people in other wealthy countries. This is not the result of us getting better care; we don’t generally have better outcomes than people in other countries. It is the result of the fact that we pay more for our care. This means that our doctors get paid much higher salaries (our autoworkers and retail clerks don’t), we pay far more for our drugs, our medical equipment and everything else in our health care system.

This is a story of class war: rich people getting richer from the inefficiency and corruption in the health care system. Soltas and Bloomberg are turning reality on its head in trying to make it a question of generational warfare.

In the same vein, Soltas gives us the generational accounts from Larry Kotlikoff, an economist who has made a career of trying to foment generational warfare. The Congressional Budget Office decided almost 20 years ago that Kotlikoff’s shenanigans were not good enough for government work, a conclusion I reached a few months earlier in my classic, “Robbing the Cradle? A Critical Assessment of Generational Accounting."

Soltas falls for a couple of Kotlikoff’s tricks in warning us that net tax rates for those born in 2026 will rise to 73 percent. First, Kotlikoff uses a 4 percent real discount rate compared to the 2 percent industry standard. This is a bit technical, but making the switch raises his net tax burden figure by close to 50 percent.

Dean Baker / January 30, 2013