Well, the Journal did run a piece decrying generational inequality, but naturally, it went the other way. The issue is the projected rise in the cost of Social Security and retiree pensions, due to the aging of the population. Our population has always been aging due to tragic fact that better living standards and improved health care coverage allow people to live longer lives.
The Journal attempted to hide this simple fact from its readers by beginning its chart of old age dependency ratios in 1980 when all the baby boomers were in the workforce. If it had begun the chart in 1950, it would have shown a sharp rise in the old-age dependency ratio between 1950 and 1980 from 0.138 to 0.196. This was associated with (horrors) large increases in Social Security taxes over this period. These tax increases did not prevent workers in this period from seeing rapid gains in living standards because the benefits of growth were widely shared.
Real wages are projected to continue to rise in the decades ahead. Average wages are projected to be more than 35 percent higher in twenty years than they are today. The WSJ apparently did not have room to mention this fact in its piece on generational inequality.
It is true that most workers have not been sharing in wage gains in recent decades. This is due to the fact they have been concentrated at the top, with folks like corporate CEOs, Wall Street types, and doctors getting a disproportionate share of growth. This is a huge problem for today’s young, but it is a story of intra-generational inequality, not inter-generational inequality.
Well, the Journal did run a piece decrying generational inequality, but naturally, it went the other way. The issue is the projected rise in the cost of Social Security and retiree pensions, due to the aging of the population. Our population has always been aging due to tragic fact that better living standards and improved health care coverage allow people to live longer lives.
The Journal attempted to hide this simple fact from its readers by beginning its chart of old age dependency ratios in 1980 when all the baby boomers were in the workforce. If it had begun the chart in 1950, it would have shown a sharp rise in the old-age dependency ratio between 1950 and 1980 from 0.138 to 0.196. This was associated with (horrors) large increases in Social Security taxes over this period. These tax increases did not prevent workers in this period from seeing rapid gains in living standards because the benefits of growth were widely shared.
Real wages are projected to continue to rise in the decades ahead. Average wages are projected to be more than 35 percent higher in twenty years than they are today. The WSJ apparently did not have room to mention this fact in its piece on generational inequality.
It is true that most workers have not been sharing in wage gains in recent decades. This is due to the fact they have been concentrated at the top, with folks like corporate CEOs, Wall Street types, and doctors getting a disproportionate share of growth. This is a huge problem for today’s young, but it is a story of intra-generational inequality, not inter-generational inequality.
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This is an important point left out of the Washington Post’s piece on the Supreme Court decision allowing states to require Internet sellers to collect sales taxes.The piece told readers that Amazon already collects state sales taxes. While this is true on its direct sales, it does not require its affiliates to collect sales taxes. Affiliates account for 30 to 40 percent of Amazon’s sales.
This is an important point left out of the Washington Post’s piece on the Supreme Court decision allowing states to require Internet sellers to collect sales taxes.The piece told readers that Amazon already collects state sales taxes. While this is true on its direct sales, it does not require its affiliates to collect sales taxes. Affiliates account for 30 to 40 percent of Amazon’s sales.
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In an interview with NPR reporter John Ydstie discussing President Trump’s latest round of tariffs on China, host Rachel Martin noted the decline in stock markets worldwide in response to tariffs and asserted that when the markets are down, everyone loses. This is not true.
If the market is down because participants accurately recognize there will be less economic growth, which also means less profits, then it is reasonable to assume that most people will lose. However, this is only one reason for the market to decline.
The market could fall because investors are less optimistic for no real reason. In that case, people like Bill Gates and Elon Musk have less money, but the bulk of the population who own little or no stock are not directly affected. If wealthy stockholders spend less money in response to their loss of stock wealth, then there is less demand in the economy.
If the Fed is concerned about excess demand, this reduction in demand will allow for it to put off interest rate hikes it might otherwise have made. That would mean people would be able to pay lower interest rates on mortgages and other loans. In effect, the lower stock prices are allowing more consumption for the bulk of the population by reducing the consumption or luxury spending (Elon Musk’s or Jeff Bezos’ space dreams) of the wealthy. Most people would not consider themselves hurt in this scenario.
Of course, the stock market may drop because income is shifting from profits to wages or from profit to taxes, both cases in which most people would fairly directly benefit. In the first case, they would get higher pay, in the second there would be more revenue for the government to spend on public goods.
In an interview with NPR reporter John Ydstie discussing President Trump’s latest round of tariffs on China, host Rachel Martin noted the decline in stock markets worldwide in response to tariffs and asserted that when the markets are down, everyone loses. This is not true.
If the market is down because participants accurately recognize there will be less economic growth, which also means less profits, then it is reasonable to assume that most people will lose. However, this is only one reason for the market to decline.
The market could fall because investors are less optimistic for no real reason. In that case, people like Bill Gates and Elon Musk have less money, but the bulk of the population who own little or no stock are not directly affected. If wealthy stockholders spend less money in response to their loss of stock wealth, then there is less demand in the economy.
If the Fed is concerned about excess demand, this reduction in demand will allow for it to put off interest rate hikes it might otherwise have made. That would mean people would be able to pay lower interest rates on mortgages and other loans. In effect, the lower stock prices are allowing more consumption for the bulk of the population by reducing the consumption or luxury spending (Elon Musk’s or Jeff Bezos’ space dreams) of the wealthy. Most people would not consider themselves hurt in this scenario.
Of course, the stock market may drop because income is shifting from profits to wages or from profit to taxes, both cases in which most people would fairly directly benefit. In the first case, they would get higher pay, in the second there would be more revenue for the government to spend on public goods.
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Since Donald Trump has apparently discovered that the US imports more than it exports from China, we can put tariffs on more goods than China can. This means that China has to look to other measures to counter Trump’s trade war. Most coverage of this issue has neglected to mention China’s strongest alternative measure.
The nuclear option, in this case, would be to stop honoring US patents and copyrights. This would be hugely costly to US corporations, especially if they began to export items, like prescription drugs, to the rest of the world. This would likely violate WTO rules, but I suspect China will care about violating WTO rules as much as Trump does.
Anyhow, given this can mean massive savings on drugs and other items for billions of people and a big hit to shareholders in Apple, Pfizer, Microsoft and other high-flying companies, it would go far towards reversing the upward redistribution of income. Like Trump said, it’s easy to win a trade war.
Since Donald Trump has apparently discovered that the US imports more than it exports from China, we can put tariffs on more goods than China can. This means that China has to look to other measures to counter Trump’s trade war. Most coverage of this issue has neglected to mention China’s strongest alternative measure.
The nuclear option, in this case, would be to stop honoring US patents and copyrights. This would be hugely costly to US corporations, especially if they began to export items, like prescription drugs, to the rest of the world. This would likely violate WTO rules, but I suspect China will care about violating WTO rules as much as Trump does.
Anyhow, given this can mean massive savings on drugs and other items for billions of people and a big hit to shareholders in Apple, Pfizer, Microsoft and other high-flying companies, it would go far towards reversing the upward redistribution of income. Like Trump said, it’s easy to win a trade war.
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A couple of weeks ago, I joked that it seemed as though Washington Post reporters are not allowed to mention the importance of the value of the dollar in trade. This was after reading a lengthy article on how low farm prices are hurting farmers which never once mentioned the rise in the value of the dollar over the last four years.
The basic story is that, other things equal, the higher the value of the dollar against the euro, yen, and other major currencies, the lower the dollar price of wheat, corn, and other farm commodities. The relatively high dollar has been an important factor depressing prices received by US farmers in recent years, but for some reason, the Post never mentioned this fact.
Steven Mufson gives perhaps an even more egregious example of not talking about currency in his discussion of US trade relations with China over the last three decades. Incredibly, the piece never once mentions the explicit decision by China to keep down the value of its currency against the dollar in order to maintain and expand its trade surplus. This practice, sometimes called “currency manipulation” led China to run a trade surplus that peaked at just under 10 percent of GDP in 2007. This is especially striking since economists would ordinarily expect a rapidly growing developing country like China to be running a large trade deficit, since it would be an importer of capital.
While China’s currency is probably less under-valued today than a decade ago (which explains the large decline in its trade surplus), it is still deliberately held down by the government which is holding more than $4 trillion either as direct central bank reserves or in its sovereign wealth fund. As the CIA World Factbook notes:
“note: because China’s exchange rate is determined by fiat rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China’s output; GDP at the official exchange rate substantially understates the actual level of China’s output vis-a-vis the rest of the world; in China’s situation, GDP at purchasing power parity provides the best measure for comparing output across countries.”
The continued under-valuation of China’s currency is a major factor in the US trade deficit. A president who was committed to more balanced trade would have currency values at the top of their agenda.
A couple of weeks ago, I joked that it seemed as though Washington Post reporters are not allowed to mention the importance of the value of the dollar in trade. This was after reading a lengthy article on how low farm prices are hurting farmers which never once mentioned the rise in the value of the dollar over the last four years.
The basic story is that, other things equal, the higher the value of the dollar against the euro, yen, and other major currencies, the lower the dollar price of wheat, corn, and other farm commodities. The relatively high dollar has been an important factor depressing prices received by US farmers in recent years, but for some reason, the Post never mentioned this fact.
Steven Mufson gives perhaps an even more egregious example of not talking about currency in his discussion of US trade relations with China over the last three decades. Incredibly, the piece never once mentions the explicit decision by China to keep down the value of its currency against the dollar in order to maintain and expand its trade surplus. This practice, sometimes called “currency manipulation” led China to run a trade surplus that peaked at just under 10 percent of GDP in 2007. This is especially striking since economists would ordinarily expect a rapidly growing developing country like China to be running a large trade deficit, since it would be an importer of capital.
While China’s currency is probably less under-valued today than a decade ago (which explains the large decline in its trade surplus), it is still deliberately held down by the government which is holding more than $4 trillion either as direct central bank reserves or in its sovereign wealth fund. As the CIA World Factbook notes:
“note: because China’s exchange rate is determined by fiat rather than by market forces, the official exchange rate measure of GDP is not an accurate measure of China’s output; GDP at the official exchange rate substantially understates the actual level of China’s output vis-a-vis the rest of the world; in China’s situation, GDP at purchasing power parity provides the best measure for comparing output across countries.”
The continued under-valuation of China’s currency is a major factor in the US trade deficit. A president who was committed to more balanced trade would have currency values at the top of their agenda.
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We all know about the problem of people who expect handouts from the government because they are too lazy or incompetent to make it on their own. The Washington Post wrote about a cattle rancher in Oregon who fits this bill, but so badly represented the facts most readers probably did not understand what is at stake.
The piece is about two ranchers in Southeastern Oregon, Dwight Hammond Jr. and his son, Steven, who were convicted of committing arson on federal property. According to the article, they also threatened federal employees. Donald Trump is apparently considering granting the two men pardons.
The article asserts that the Hammonds “advocating public use of federal lands — especially for grazing of livestock.” This statement is self-contradictory. The Hammonds are advocating that they be able to use federal land for their private purpose — grazing of livestock — they are not arguing that it should be open to the public for general use.
Their use of the land for grazing will limit its use for other purposes and, of course everyone cannot use the land for grazing. This is a case where the Hammonds apparently feel the government owes them a handout in the form of free access to public land. The value of this handout almost certainly swamps the value of the benefits that a family might receive from food stamps, TANF, or other anti-poverty programs that set many people into a frenzy.
Addendum
BillB in the comments section informs us that these two ranchers have a history of making violent threats against federal employees and their families. They would seem to fit the definition of “terrorists,” the sort of characters conservatives usually talk about locking up for very long periods of time. It is striking that Donald Trump seems interested in pardoning them.
We all know about the problem of people who expect handouts from the government because they are too lazy or incompetent to make it on their own. The Washington Post wrote about a cattle rancher in Oregon who fits this bill, but so badly represented the facts most readers probably did not understand what is at stake.
The piece is about two ranchers in Southeastern Oregon, Dwight Hammond Jr. and his son, Steven, who were convicted of committing arson on federal property. According to the article, they also threatened federal employees. Donald Trump is apparently considering granting the two men pardons.
The article asserts that the Hammonds “advocating public use of federal lands — especially for grazing of livestock.” This statement is self-contradictory. The Hammonds are advocating that they be able to use federal land for their private purpose — grazing of livestock — they are not arguing that it should be open to the public for general use.
Their use of the land for grazing will limit its use for other purposes and, of course everyone cannot use the land for grazing. This is a case where the Hammonds apparently feel the government owes them a handout in the form of free access to public land. The value of this handout almost certainly swamps the value of the benefits that a family might receive from food stamps, TANF, or other anti-poverty programs that set many people into a frenzy.
Addendum
BillB in the comments section informs us that these two ranchers have a history of making violent threats against federal employees and their families. They would seem to fit the definition of “terrorists,” the sort of characters conservatives usually talk about locking up for very long periods of time. It is striking that Donald Trump seems interested in pardoning them.
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The Federal Reserve Board’s monthly reports on industrial production used to get a fair bit of attention in the business press, but May’s 0.7 percent decline in manufacturing activity seems to have passed largely unnoticed. These data are erratic and subject to large revisions, so this is hardly an end of the world kind of number, but it certainly is not a figure consistent with the investment boom promised by proponents of the tax cut.
It is also consistent with the reported fall in the length of the average workweek in manufacturing reported in the May employment report from the Bureau of Labor Statistics. This decline in hours led to a 0.3 percent decline in the index of aggregate hours for the month.
These are the sort of drops that are expected when there is an unusual weather event like a big snowstorm or a hurricane hitting a major population center. However, there were no obvious events in this category in May, which does raise the possibility that we may be seeing a turning point in manufacturing with the brief upturn over the last couple of years petering out.
The Federal Reserve Board’s monthly reports on industrial production used to get a fair bit of attention in the business press, but May’s 0.7 percent decline in manufacturing activity seems to have passed largely unnoticed. These data are erratic and subject to large revisions, so this is hardly an end of the world kind of number, but it certainly is not a figure consistent with the investment boom promised by proponents of the tax cut.
It is also consistent with the reported fall in the length of the average workweek in manufacturing reported in the May employment report from the Bureau of Labor Statistics. This decline in hours led to a 0.3 percent decline in the index of aggregate hours for the month.
These are the sort of drops that are expected when there is an unusual weather event like a big snowstorm or a hurricane hitting a major population center. However, there were no obvious events in this category in May, which does raise the possibility that we may be seeing a turning point in manufacturing with the brief upturn over the last couple of years petering out.
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In a Washington Post analysis, Philip Bump assessed the evidence as to whether the Republican tax cuts passed last year are leading to the promised wage growth. He notes promises from Donald Trump about how the tax cut would lead to more hiring, which would push up wages.
While this is in fact what Trump promised on many occasions, this is likely due to the fact he didn’t understand the logic of his own tax cut. His economists justified the promised wage gains not by any immediate hiring effect, but rather by the effect the tax cut would have on investment. The tax cut was supposed to induce a flood of new investment. This would, in turn, lead to more rapid productivity growth. The big wage dividend would come from the workers’ share of this increased productivity.
For this reason, the key factor to watch at this point is investment, not month-to-month wage movements. By this measure, the tax cut is striking out badly. There is zero evidence of any uptick in investment, or investment plans, over the pre-tax cut pace.
In a Washington Post analysis, Philip Bump assessed the evidence as to whether the Republican tax cuts passed last year are leading to the promised wage growth. He notes promises from Donald Trump about how the tax cut would lead to more hiring, which would push up wages.
While this is in fact what Trump promised on many occasions, this is likely due to the fact he didn’t understand the logic of his own tax cut. His economists justified the promised wage gains not by any immediate hiring effect, but rather by the effect the tax cut would have on investment. The tax cut was supposed to induce a flood of new investment. This would, in turn, lead to more rapid productivity growth. The big wage dividend would come from the workers’ share of this increased productivity.
For this reason, the key factor to watch at this point is investment, not month-to-month wage movements. By this measure, the tax cut is striking out badly. There is zero evidence of any uptick in investment, or investment plans, over the pre-tax cut pace.
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