Read More Leer más Join the discussion Participa en la discusión
In her Washington Post column, Catherine Rampell repeats some ill-founded conventional wisdom in telling readers that French president Emmanuel Macron’s plans to weaken labor unions and reduce restrictions on laying off workers are the path to revitalizing France’s economy. In fact, this claim is not supported by the evidence. There is little evidence that strong unions or labor market protections are associated with high unemployment.
The most obvious reason that France has had high unemployment is the turn to austerity in 2010 following the economic crisis. As a result of the cutbacks in government spending, there was no source of demand to replace the demand generated by asset bubbles prior to the crisis. For some reason, this fact is rarely mentioned in reporting on France’s economy.
It is also worth noting that France’s “stagnant labor market” has a much higher employment rate for prime age (ages 25 to 54) workers than the U.S. labor market (79.7 percent in France compared to 78.2 percent in the United States). This fact would seem to undermine the case that regulations are seriously hampering France’s labor market.
In her Washington Post column, Catherine Rampell repeats some ill-founded conventional wisdom in telling readers that French president Emmanuel Macron’s plans to weaken labor unions and reduce restrictions on laying off workers are the path to revitalizing France’s economy. In fact, this claim is not supported by the evidence. There is little evidence that strong unions or labor market protections are associated with high unemployment.
The most obvious reason that France has had high unemployment is the turn to austerity in 2010 following the economic crisis. As a result of the cutbacks in government spending, there was no source of demand to replace the demand generated by asset bubbles prior to the crisis. For some reason, this fact is rarely mentioned in reporting on France’s economy.
It is also worth noting that France’s “stagnant labor market” has a much higher employment rate for prime age (ages 25 to 54) workers than the U.S. labor market (79.7 percent in France compared to 78.2 percent in the United States). This fact would seem to undermine the case that regulations are seriously hampering France’s labor market.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
A Washington Post editorial praised Ohio’s decision to sue pharmaceutical companies for promoting opioid pain medication. The claim being made in the suit is that the companies minimized the risk of addiction in order to increase their market.
Incredibly, the piece does not mention the protectionism that gives these drug companies the incentive to push their drugs for improper uses. Government-granted patent monopolies allow the companies to sell their drugs for twenty, thirty, or forty times the free market price. When a government granted monopoly allows a drug company to raise its price by a factor of forty over the free market price it has the same distortionary effects as a trade tariff of 4,000 percent.
While the Post would be very quick to condemn anyone who proposed placing a 10 or 20 percent tariffs on shoes or steel to protect the domestic industry, it is apparently unconcerned about the much larger distortions that result from market barriers that are hundreds of times larger in the case of prescription drugs.
As a result of this protectionism, the country will spend more than $440 billion (around $1,300 per person) for drugs that would likely sell for less than $80 billion in a free market. In addition, this protectionism gives drug companies incentive to lie about the effectiveness and safety of their drugs, as we clearly see in the case of opiod painkillers.
Unfortunately, the Post is so committed to protectionism in this case that it does not want to even talk about the root cause of the problem.
A Washington Post editorial praised Ohio’s decision to sue pharmaceutical companies for promoting opioid pain medication. The claim being made in the suit is that the companies minimized the risk of addiction in order to increase their market.
Incredibly, the piece does not mention the protectionism that gives these drug companies the incentive to push their drugs for improper uses. Government-granted patent monopolies allow the companies to sell their drugs for twenty, thirty, or forty times the free market price. When a government granted monopoly allows a drug company to raise its price by a factor of forty over the free market price it has the same distortionary effects as a trade tariff of 4,000 percent.
While the Post would be very quick to condemn anyone who proposed placing a 10 or 20 percent tariffs on shoes or steel to protect the domestic industry, it is apparently unconcerned about the much larger distortions that result from market barriers that are hundreds of times larger in the case of prescription drugs.
As a result of this protectionism, the country will spend more than $440 billion (around $1,300 per person) for drugs that would likely sell for less than $80 billion in a free market. In addition, this protectionism gives drug companies incentive to lie about the effectiveness and safety of their drugs, as we clearly see in the case of opiod painkillers.
Unfortunately, the Post is so committed to protectionism in this case that it does not want to even talk about the root cause of the problem.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
The NYT featured yet another piece on a country, in this case Japan, facing a future with a lower population. The piece warns that it will be difficult to maintain economic growth with a declining population and that Japan’s labor shortage would get more severe.
This doesn’t sound like too bad of a story to people familiar with economics. Thus far the labor shortage has not been serious enough to cause wages to rise in Japan. If it eventually does get more severe and wages do rise then it just would mean that some of the least productive jobs would go unfilled. For example, perhaps Tokyo would no longer pay workers to shove people into overcrowded subway cars.
As far as GDP growth, economists usually care about GDP per capita as a measure of living standards, not total GDP. This is why Denmark is a richer country than India, even though India has a much larger GDP. (The piece does note this point in passing in the second to the last paragraph.)
It is worth reminding readers that growth in productivity swamps the impact of demographics. If Japan can sustain a 1.5 percent pace of productivity growth, then output per worker hour would be 80 percent higher in forty years. Even in a very extreme demographic change, say going from three workers per retiree to 1.8 workers per retiree, this would still allow for a 17 percent rise in average living standards over this period. (This assumes retirees consume 80 percent as much as workers on average.) And this does not account for the benefits from less strain on the infrastructure and the natural environment. Nor does it take account of the lower ratio of dependent children to workers.
If Japan can sustain productivity growth of 2.0 percent annually (well below the 3.0 percent Golden Age pace in the United States from 1947 to 1973 and again from 1995 to 2005), then the living standards of workers and retirees could rise by 42 percent over this period, in spite of the rising ratio of retirees to workers. Presumably the folks who are concerned about the job-killing robots expect that productivity growth will be considerably more rapid.
The NYT featured yet another piece on a country, in this case Japan, facing a future with a lower population. The piece warns that it will be difficult to maintain economic growth with a declining population and that Japan’s labor shortage would get more severe.
This doesn’t sound like too bad of a story to people familiar with economics. Thus far the labor shortage has not been serious enough to cause wages to rise in Japan. If it eventually does get more severe and wages do rise then it just would mean that some of the least productive jobs would go unfilled. For example, perhaps Tokyo would no longer pay workers to shove people into overcrowded subway cars.
As far as GDP growth, economists usually care about GDP per capita as a measure of living standards, not total GDP. This is why Denmark is a richer country than India, even though India has a much larger GDP. (The piece does note this point in passing in the second to the last paragraph.)
It is worth reminding readers that growth in productivity swamps the impact of demographics. If Japan can sustain a 1.5 percent pace of productivity growth, then output per worker hour would be 80 percent higher in forty years. Even in a very extreme demographic change, say going from three workers per retiree to 1.8 workers per retiree, this would still allow for a 17 percent rise in average living standards over this period. (This assumes retirees consume 80 percent as much as workers on average.) And this does not account for the benefits from less strain on the infrastructure and the natural environment. Nor does it take account of the lower ratio of dependent children to workers.
If Japan can sustain productivity growth of 2.0 percent annually (well below the 3.0 percent Golden Age pace in the United States from 1947 to 1973 and again from 1995 to 2005), then the living standards of workers and retirees could rise by 42 percent over this period, in spite of the rising ratio of retirees to workers. Presumably the folks who are concerned about the job-killing robots expect that productivity growth will be considerably more rapid.
Read More Leer más Join the discussion Participa en la discusión
The NYT had a very good article on how the fossil fuel industry and other rich donors got the Republican party to be committed to denying the reality of global warming, Unfortunately, the article carried a headline that asserted the Republicans “view” climate change as fake science.
There is nothing in the article to indicate what Republicans actually believe about climate change. There is no reason not to assume that the Republican leadership believes anything different about climate change than the vast majority of educated people in the United States. The article explains how in order to advance their careers in politics they have an interest in denying the reality of climate change. It says nothing about what they believe to be true.
The NYT had a very good article on how the fossil fuel industry and other rich donors got the Republican party to be committed to denying the reality of global warming, Unfortunately, the article carried a headline that asserted the Republicans “view” climate change as fake science.
There is nothing in the article to indicate what Republicans actually believe about climate change. There is no reason not to assume that the Republican leadership believes anything different about climate change than the vast majority of educated people in the United States. The article explains how in order to advance their careers in politics they have an interest in denying the reality of climate change. It says nothing about what they believe to be true.
Read More Leer más Join the discussion Participa en la discusión
Yes folks, your friend on the Washington Post opinion page, George Will, wants to reduce your tax burden. He argues that the Corporation for Public Broadcasting (CPB) is a waste of taxpayer dollars. It is forcing average taxpayers to foot the bill for radio and TV shows that members of Congress value.
Naturally, Mr. Will is concerned about the burden that CPB is putting on the pocketbook of Joe and Jill Sixpack. He tells us that it has cost the country $12 billion. Most people may not offhand have a good sense of how much $12 billion is. Unlike Post owner Jeff Bezos (who got rich from his company’s exemption from having to collect sales taxes), they don’t have that sort of money. They may also not realize that Will was referring to cumulative spending on CPB over 50 years.
If Will was interested in more honest discussion of the burden imposed by the appropriation for CPB, he could have told readers that the annual spending of $445 million (0.013 percent of total spending), comes to roughly $1.40 per person per year. This means that if we zero out the appropriation, Joe and Jill Sixpack can get themselves another third of a six pack with the savings.
It might have also been worth mentioning in this context the tax deduction for charitable contributions. If someone like the Koch brothers decide to donate $1 billion to their favorite think tank producing nonsense denying global warming, Joe and Jill Sixpack will have to pick up the tab for 40 cents on the dollar, or $400 million, since the Koch brothers will have reduced their tax liability by this amount. Post readers are looking forward to the Will column highlighting the unfairness of a system that makes average taxpayers pick up the tab for whatever it is that the Koch brothers and other billionaires want us to watch.
Yes folks, your friend on the Washington Post opinion page, George Will, wants to reduce your tax burden. He argues that the Corporation for Public Broadcasting (CPB) is a waste of taxpayer dollars. It is forcing average taxpayers to foot the bill for radio and TV shows that members of Congress value.
Naturally, Mr. Will is concerned about the burden that CPB is putting on the pocketbook of Joe and Jill Sixpack. He tells us that it has cost the country $12 billion. Most people may not offhand have a good sense of how much $12 billion is. Unlike Post owner Jeff Bezos (who got rich from his company’s exemption from having to collect sales taxes), they don’t have that sort of money. They may also not realize that Will was referring to cumulative spending on CPB over 50 years.
If Will was interested in more honest discussion of the burden imposed by the appropriation for CPB, he could have told readers that the annual spending of $445 million (0.013 percent of total spending), comes to roughly $1.40 per person per year. This means that if we zero out the appropriation, Joe and Jill Sixpack can get themselves another third of a six pack with the savings.
It might have also been worth mentioning in this context the tax deduction for charitable contributions. If someone like the Koch brothers decide to donate $1 billion to their favorite think tank producing nonsense denying global warming, Joe and Jill Sixpack will have to pick up the tab for 40 cents on the dollar, or $400 million, since the Koch brothers will have reduced their tax liability by this amount. Post readers are looking forward to the Will column highlighting the unfairness of a system that makes average taxpayers pick up the tab for whatever it is that the Koch brothers and other billionaires want us to watch.
Read More Leer más Join the discussion Participa en la discusión
One of the largely overlooked implications of Friday’s weak job report is that it likely means that we will see a strong rebound in productivity growth for the second quarter. GDP growth is likely to bounce back from the first quarter’s weak 1.2 percent number, most likely coming in between 3.0 percent to 4.0 percent. With the rate of growth of hours worked likely less than 1.0 percent, we will be looking at productivity growth in the 2.0 percent to 3.0 percent range for the quarter.
Here are three quick thoughts:
1) Quarterly productivity data are hugely erratic, so most likely a rebound in a single quarter means nothing. It is entirely possible that the third quarter will put us back on our weak 1.0 percent productivity growth path.
2) I am betting that productivity growth will pick up as the labor market tightens further (or perhaps I should say “if” the labor market tightens further), as workers move from low-paying, low-productivity jobs (e.g. greeters at Walmart and the midnight shift at a convenience store) into higher paying, high-productivity jobs.
3) If productivity growth does pick up, it will be good for workers. We had 3.0 percent annual productivity growth from 1947 to 1973 and again from 1995 to 2005. In the first period, we had low unemployment and broadly shared wage gains. The same was true in the years from 1996 to 2001, until the collapse of the stock bubble threw us into a recession.
Strong productivity growth coupled with sound economic policy (e.g. the Fed not raising interest rates to keep people from getting jobs) creates the basis for rapidly improving standards of living. We need not worry about it leading to mass unemployment if the folks in charge of economic policy have a clue.
One of the largely overlooked implications of Friday’s weak job report is that it likely means that we will see a strong rebound in productivity growth for the second quarter. GDP growth is likely to bounce back from the first quarter’s weak 1.2 percent number, most likely coming in between 3.0 percent to 4.0 percent. With the rate of growth of hours worked likely less than 1.0 percent, we will be looking at productivity growth in the 2.0 percent to 3.0 percent range for the quarter.
Here are three quick thoughts:
1) Quarterly productivity data are hugely erratic, so most likely a rebound in a single quarter means nothing. It is entirely possible that the third quarter will put us back on our weak 1.0 percent productivity growth path.
2) I am betting that productivity growth will pick up as the labor market tightens further (or perhaps I should say “if” the labor market tightens further), as workers move from low-paying, low-productivity jobs (e.g. greeters at Walmart and the midnight shift at a convenience store) into higher paying, high-productivity jobs.
3) If productivity growth does pick up, it will be good for workers. We had 3.0 percent annual productivity growth from 1947 to 1973 and again from 1995 to 2005. In the first period, we had low unemployment and broadly shared wage gains. The same was true in the years from 1996 to 2001, until the collapse of the stock bubble threw us into a recession.
Strong productivity growth coupled with sound economic policy (e.g. the Fed not raising interest rates to keep people from getting jobs) creates the basis for rapidly improving standards of living. We need not worry about it leading to mass unemployment if the folks in charge of economic policy have a clue.
Read More Leer más Join the discussion Participa en la discusión
Many folks might have thought Donald Trump had abandoned his pledge about “draining the swamp” when he began filling his administration with Goldman Sachs alums and other Wall Street-types and reversed all the ethics rules put in place for the last five decades to prevent corruption. But the Washington Post tells us this is not true.
According to the Washington Post “draining the swamp” just meant firing government workers. So apparently if Wall Streeters and rich folks (including Trump family and friends) rip the taxpayers off for millions and billions in corrupt deals, it is okay as long as he fires government employees making five-figure salaries or maybe in a few cases, six-figure salaries.
So, Trump voters are apparently cool with being ripped off to put more money in the pockets of really rich people. They only get upset when their tax dollars are used to provide middle-income jobs for people doing things like cleaning up the environment or keeping our national parks in good shape. It’s good we have the Washington Post to tell us this.
Many folks might have thought Donald Trump had abandoned his pledge about “draining the swamp” when he began filling his administration with Goldman Sachs alums and other Wall Street-types and reversed all the ethics rules put in place for the last five decades to prevent corruption. But the Washington Post tells us this is not true.
According to the Washington Post “draining the swamp” just meant firing government workers. So apparently if Wall Streeters and rich folks (including Trump family and friends) rip the taxpayers off for millions and billions in corrupt deals, it is okay as long as he fires government employees making five-figure salaries or maybe in a few cases, six-figure salaries.
So, Trump voters are apparently cool with being ripped off to put more money in the pockets of really rich people. They only get upset when their tax dollars are used to provide middle-income jobs for people doing things like cleaning up the environment or keeping our national parks in good shape. It’s good we have the Washington Post to tell us this.
Read More Leer más Join the discussion Participa en la discusión
