Beat the Press

Beat the press por Dean Baker

Beat the Press is Dean Baker's commentary on economic reporting. He is a Senior Economist at the Center for Economic and Policy Research (CEPR). To never miss a post, subscribe to a weekly email roundup of Beat the Press. Please also consider supporting the blog on Patreon.

Cokie Roberts outlined the history of the Electoral College in a discussion in a Morning Edition segment this morning. At the end of the segment, she was asked whether she would favor getting rid of the Electoral College and instead just having presidents elected by the direct popular vote. (Donald Trump lost in this category by more than 2.5 million votes.)

Roberts said no, that she would keep the Electoral College. Strangely, her argument was that she wanted to enhance the importance of minorities. She claimed that the Electoral College made the minority vote very important in key swing states.

While this is true, a recent analysis by Andrew Gelman and Pierre-Antoine Kremp showed that swing states are whiter on average than the nation as a whole. The basic story is that several large uncontestable states, such as California, are disproportionately minorities, while several of the swing states, such as New Hampshire and Iowa, are overwhelmingly white. This means that a focus on the outcomes in swing states will tend to reduce rather than increase the focus on minorities.

It is also worth noting that if we ignored the likelihood that a state would be a swing state and just examined how the Electoral College skews the importance of votes, it also works to the disadvantage of minorities. The reason is that the states with small populations, like Wyoming and Montana, which are over-represented in the Electoral College, are overwhelmingly white. By this measure also, the Electoral College does not work to the benefit of minorities.

It would have also been worth mentioning the National Popular Vote drive. This is an effort to get states to agree to award their electors to the winner of the national popular vote. It would take effect as soon as states representing a majority in the Electoral College agreed to assign their electors based on the outcome of the popular vote. States that account for 165 of the needed 270 votes have made this commitment thus far. This is the most plausible path at present for turning to a direct popular vote for president. It would have been useful to mention it in a segment like this.

Cokie Roberts outlined the history of the Electoral College in a discussion in a Morning Edition segment this morning. At the end of the segment, she was asked whether she would favor getting rid of the Electoral College and instead just having presidents elected by the direct popular vote. (Donald Trump lost in this category by more than 2.5 million votes.)

Roberts said no, that she would keep the Electoral College. Strangely, her argument was that she wanted to enhance the importance of minorities. She claimed that the Electoral College made the minority vote very important in key swing states.

While this is true, a recent analysis by Andrew Gelman and Pierre-Antoine Kremp showed that swing states are whiter on average than the nation as a whole. The basic story is that several large uncontestable states, such as California, are disproportionately minorities, while several of the swing states, such as New Hampshire and Iowa, are overwhelmingly white. This means that a focus on the outcomes in swing states will tend to reduce rather than increase the focus on minorities.

It is also worth noting that if we ignored the likelihood that a state would be a swing state and just examined how the Electoral College skews the importance of votes, it also works to the disadvantage of minorities. The reason is that the states with small populations, like Wyoming and Montana, which are over-represented in the Electoral College, are overwhelmingly white. By this measure also, the Electoral College does not work to the benefit of minorities.

It would have also been worth mentioning the National Popular Vote drive. This is an effort to get states to agree to award their electors to the winner of the national popular vote. It would take effect as soon as states representing a majority in the Electoral College agreed to assign their electors based on the outcome of the popular vote. States that account for 165 of the needed 270 votes have made this commitment thus far. This is the most plausible path at present for turning to a direct popular vote for president. It would have been useful to mention it in a segment like this.

Washington Post Accepts Trump Excuse at Face Value

The headline of a Washington Post article told readers:

“Trump is skipping his press conference to focus on his picks for agriculture and the VA.”

Of course, the Washington Post does not actually know why Donald Trump skipped his press conference. It knows why he said that he skipped his press conference. As the article itself suggests, the reason given for missing the press conference may not in fact be the real reason.

It would be helpful if the Post just reported what it knew to be true rather than implying that Donald Trump’s claims are in fact truthful. It also would have been useful if it had mentioned the purpose of the cancelled press conference. This was supposed to be the conference in which he disclosed his plans for his business empire while he is president. Trump claims that he will set up an arrangement that will prevent conflict of interest problems.

 

Thanks to Robert Sadin for calling this to my attention.

The headline of a Washington Post article told readers:

“Trump is skipping his press conference to focus on his picks for agriculture and the VA.”

Of course, the Washington Post does not actually know why Donald Trump skipped his press conference. It knows why he said that he skipped his press conference. As the article itself suggests, the reason given for missing the press conference may not in fact be the real reason.

It would be helpful if the Post just reported what it knew to be true rather than implying that Donald Trump’s claims are in fact truthful. It also would have been useful if it had mentioned the purpose of the cancelled press conference. This was supposed to be the conference in which he disclosed his plans for his business empire while he is president. Trump claims that he will set up an arrangement that will prevent conflict of interest problems.

 

Thanks to Robert Sadin for calling this to my attention.

Truth is the First Casualty in Trade Deals

The supporters of the TPP and recent trade deals are licking their wounds and preparing their counter-attack. Rather than thinking about things like maybe structuring trade deals in ways that don’t disadvantage large segments of the population (yes, this can be done — have free trade for doctors and other highly paid professionals and reduce patent and copyright protection — all in my book, Rigged [it’s free]), they are focusing on new messaging for more of the same. The new messaging does not necessarily involve being truthful.

Hence, the Washington Post made a tool to show “how Donald Trump’s offshoring tariff might affect your shopping.” The tool is a calculator that shows how much Donald Trump’s promised 35 percent tariff on the re-importing of offshored products will raise prices. If you click on, it shows that the retail price of the product is increased by 35 percent. For example, the price of the Carrier air conditioner, that the manufacturer had planned to make in Mexico, would rise by $800 from the $2,400 price listed by Amazon.

The problem with this story is that the basis for the calculation in the Post’s “tool” is the retail price of the product. The basis for the tariff would be the wholesale price of the imported product, which would not include shipping costs, the markup of the retailer, nor many other costs that customers would be paying when they buy it from Amazon. As a ballpark number, the basis for the tariff would likely be in the neighborhood of half of the price that Amazon is listing.

I have said it many times before, and I’ll say it again here, Donald Trump’s plan for company specific tariffs for outsourced items is completely hare-brained. It would be easy to avoid and is hardly a substitute for serious trade policy. But this is not an excuse for making up stories to scare people. The way to have a serious debate on trade policy is to have a serious debate on the issues, not dumping manure on the people who disagree with you.

The supporters of the TPP and recent trade deals are licking their wounds and preparing their counter-attack. Rather than thinking about things like maybe structuring trade deals in ways that don’t disadvantage large segments of the population (yes, this can be done — have free trade for doctors and other highly paid professionals and reduce patent and copyright protection — all in my book, Rigged [it’s free]), they are focusing on new messaging for more of the same. The new messaging does not necessarily involve being truthful.

Hence, the Washington Post made a tool to show “how Donald Trump’s offshoring tariff might affect your shopping.” The tool is a calculator that shows how much Donald Trump’s promised 35 percent tariff on the re-importing of offshored products will raise prices. If you click on, it shows that the retail price of the product is increased by 35 percent. For example, the price of the Carrier air conditioner, that the manufacturer had planned to make in Mexico, would rise by $800 from the $2,400 price listed by Amazon.

The problem with this story is that the basis for the calculation in the Post’s “tool” is the retail price of the product. The basis for the tariff would be the wholesale price of the imported product, which would not include shipping costs, the markup of the retailer, nor many other costs that customers would be paying when they buy it from Amazon. As a ballpark number, the basis for the tariff would likely be in the neighborhood of half of the price that Amazon is listing.

I have said it many times before, and I’ll say it again here, Donald Trump’s plan for company specific tariffs for outsourced items is completely hare-brained. It would be easy to avoid and is hardly a substitute for serious trade policy. But this is not an excuse for making up stories to scare people. The way to have a serious debate on trade policy is to have a serious debate on the issues, not dumping manure on the people who disagree with you.

This is really embarrassing, I’m having Robert Samuelson do my work for me. His column today pointed out that a Washington Post piece from last week may have misled readers on the amount of waste in the Pentagon’s operations.

That article referred to $125 billion in waste that was identified in an internal Pentagon report that was never made public. This figure is then compared with the $580 billion annual budget for the Defense Department.

The problem is that the $125 billion is a cumulative sum over a five-year period. While the piece does identify it that way, it is likely that many readers would be prone to compare the $125 billion in waste identified by the report with the annual budget, rather than taking the implied $25 billion annual figure. The latter figure would imply that just over 4.0 percent of total spending fell into this waste category, while the full $125 billion figure would be more than one-fifth of spending.

Samuelson was right to call attention to this issue. There is no reason the Post could not have been clear in putting these numbers in an apples to apples context, either highlighting the amount of money spent annually that is identified as waste or comparing the $125 billion figure to five-year spending.

Remember, the point is supposed to be informing readers.

This is really embarrassing, I’m having Robert Samuelson do my work for me. His column today pointed out that a Washington Post piece from last week may have misled readers on the amount of waste in the Pentagon’s operations.

That article referred to $125 billion in waste that was identified in an internal Pentagon report that was never made public. This figure is then compared with the $580 billion annual budget for the Defense Department.

The problem is that the $125 billion is a cumulative sum over a five-year period. While the piece does identify it that way, it is likely that many readers would be prone to compare the $125 billion in waste identified by the report with the annual budget, rather than taking the implied $25 billion annual figure. The latter figure would imply that just over 4.0 percent of total spending fell into this waste category, while the full $125 billion figure would be more than one-fifth of spending.

Samuelson was right to call attention to this issue. There is no reason the Post could not have been clear in putting these numbers in an apples to apples context, either highlighting the amount of money spent annually that is identified as waste or comparing the $125 billion figure to five-year spending.

Remember, the point is supposed to be informing readers.

Private Equity is Not All Hostess Twinkies

The NYT ran a lengthy piece this weekend on how two private equity (PE) firms, Apollo Global Management and Metropoulos & Company, made a huge return on buying up the rights to Hostess Twinkies and a few of the company’s other brands, following the company’s bankruptcy. There are a couple of issues that deserve somewhat further attention than the article gives them. First, while the article notes that its bankruptcy occurred under the ownership of Ripplewood Holdings, another PE company, it doesn’t discuss the issues which led to the original bankruptcy. Although the full story of Ripplewood’s control of Hostess would require another article of at least equal length, it provides a useful example of a private equity failure. Ripplewood borrowed heavily, putting the company in a precarious financial state. It also never made the investments necessary to modernize its facilities, putting it at a competitive disadvantage. As the article notes, the bankruptcy relieved the company of its debts and pension obligations. The latter of which would fall to the Pension Benefit Guaranty Corporation (PBGC), which is run by the federal government. The PBGC is itself under serious strain presently, due to the collapse of many large pension funds. Furthermore, even if the PBGC is able to pay benefits at the legally guaranteed levels, most former Hostess workers will still see large cuts from the pensions they had earned while working. This point is worth noting in the context of what appears to be the main basis for the huge returns earned by the two PE companies. It appears that they were able to buy the rights to Twinkies and other Hostess brands at a price that was far below the actual market value. While this indicated good insight on the part of the PE fund managers, if these brands had been sold for closer to the correct market value, there would have been more money to pay workers’ pensions and other creditors.
The NYT ran a lengthy piece this weekend on how two private equity (PE) firms, Apollo Global Management and Metropoulos & Company, made a huge return on buying up the rights to Hostess Twinkies and a few of the company’s other brands, following the company’s bankruptcy. There are a couple of issues that deserve somewhat further attention than the article gives them. First, while the article notes that its bankruptcy occurred under the ownership of Ripplewood Holdings, another PE company, it doesn’t discuss the issues which led to the original bankruptcy. Although the full story of Ripplewood’s control of Hostess would require another article of at least equal length, it provides a useful example of a private equity failure. Ripplewood borrowed heavily, putting the company in a precarious financial state. It also never made the investments necessary to modernize its facilities, putting it at a competitive disadvantage. As the article notes, the bankruptcy relieved the company of its debts and pension obligations. The latter of which would fall to the Pension Benefit Guaranty Corporation (PBGC), which is run by the federal government. The PBGC is itself under serious strain presently, due to the collapse of many large pension funds. Furthermore, even if the PBGC is able to pay benefits at the legally guaranteed levels, most former Hostess workers will still see large cuts from the pensions they had earned while working. This point is worth noting in the context of what appears to be the main basis for the huge returns earned by the two PE companies. It appears that they were able to buy the rights to Twinkies and other Hostess brands at a price that was far below the actual market value. While this indicated good insight on the part of the PE fund managers, if these brands had been sold for closer to the correct market value, there would have been more money to pay workers’ pensions and other creditors.

Paul Krugman told readers that intellectual types like him tend to vote for progressive taxes and other measures that benefit white working class people. This is only partly true.

People with college and advanced degrees tend to be strong supporters of recent trade deals [I’m including China’s entry to the WTO] that have been a major factor in the loss of manufacturing jobs in the last quarter century, putting downward pressure on the pay of workers without college degrees. They also tend to support stronger and longer patent and copyright protections (partly in trade deals), which also redistribute income upward. (We will pay $430 billion for prescription drugs this year, which would cost 10 to 20 percent of this amount in a free market. The difference is equal to roughly five times annual spending on food stamps.)

Educated people also tended to support the deregulation of the financial sector, which has led to some of the largest fortunes in the country. They also overwhelmingly supported the 2008 bailout which threw a lifeline to the Wall Street banks at a time when the market was going to condemn them to the dustbin of history. (Sorry, the second Great Depression story as the alternative is nonsense — that would have required a decade of stupid policy, nothing about the financial collapse itself would have entailed a second Great Depression.)

His crew has also been at best lukewarm on defending unions. However, they don’t seem to like free trade in professional services that would, for example, allow more foreign doctors to practice in the United States, bringing their pay in line with doctors in Europe and Canada. The lower pay for doctors alone could save us close to $100 billion a year in health care expenses.

None of this means that the plutocrats standing alongside Trump are somehow better for working class people. They have made it pretty clear that they intend to use his presidency to take everything they can from the rest of the country. But Krugman is engaging in some serious fanciful thinking if he thinks that intellectual types have in general been acting in the interests of the working class. (And, I suspect many do ridicule the behavior and lifestyles of the working class.) 

Yes, all of this is talked about in my new book Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer (it’s free).

Paul Krugman told readers that intellectual types like him tend to vote for progressive taxes and other measures that benefit white working class people. This is only partly true.

People with college and advanced degrees tend to be strong supporters of recent trade deals [I’m including China’s entry to the WTO] that have been a major factor in the loss of manufacturing jobs in the last quarter century, putting downward pressure on the pay of workers without college degrees. They also tend to support stronger and longer patent and copyright protections (partly in trade deals), which also redistribute income upward. (We will pay $430 billion for prescription drugs this year, which would cost 10 to 20 percent of this amount in a free market. The difference is equal to roughly five times annual spending on food stamps.)

Educated people also tended to support the deregulation of the financial sector, which has led to some of the largest fortunes in the country. They also overwhelmingly supported the 2008 bailout which threw a lifeline to the Wall Street banks at a time when the market was going to condemn them to the dustbin of history. (Sorry, the second Great Depression story as the alternative is nonsense — that would have required a decade of stupid policy, nothing about the financial collapse itself would have entailed a second Great Depression.)

His crew has also been at best lukewarm on defending unions. However, they don’t seem to like free trade in professional services that would, for example, allow more foreign doctors to practice in the United States, bringing their pay in line with doctors in Europe and Canada. The lower pay for doctors alone could save us close to $100 billion a year in health care expenses.

None of this means that the plutocrats standing alongside Trump are somehow better for working class people. They have made it pretty clear that they intend to use his presidency to take everything they can from the rest of the country. But Krugman is engaging in some serious fanciful thinking if he thinks that intellectual types have in general been acting in the interests of the working class. (And, I suspect many do ridicule the behavior and lifestyles of the working class.) 

Yes, all of this is talked about in my new book Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer (it’s free).

In an article discussing the Trump administration’s attitudes toward unions, the Washington Post misrepresented so-called right-to-work laws.

“Some union leaders are worried that a Trump administration would attempt to introduce a national right-to-work law — allowing any employee anywhere to exempt themselves from participating in a union — and block unions from deducting dues from paychecks.”

Workers already have the option not to participate in a union. Workers cannot be compelled to join a union anywhere in the United States. They currently can be required to pay a representation fee in a workplace represented by a union. Under the law, a union is obligated to represent all the workers in a bargaining unit, whether or not they join the union. This means that all workers will benefit in the same way from the wages and benefits negotiated by the union. Also, the union is obligated to defend a worker in disciplinary matters or other individual issues even if they are not members of the union.

The issue is whether workers can be obligated to pay for this representation or have the option to get it for free. Twenty-six states now deny workers the right to negotiate contracts that require all workers to pay for the representation they get from a union. Apparently, some of those associated with Trump also want to prohibit workers from negotiating contracts under which the employer deducts union dues as a service to the union.

This is an issue about freedom of contract, where the government is limiting what sort of contracts unions can sign with an employer. It is not an issue about individual rights. Any worker who doesn’t like unions has the option to work at a workplace where employees are not represented by a union. Just as an employer can impose conditions on workers (for example, wearing a silly uniform or requiring workers to address customers in a particular way), current law allows contracts under which workers set conditions on employment for their co-workers. Apparently, people associated with Trump want to take away this right.

In an article discussing the Trump administration’s attitudes toward unions, the Washington Post misrepresented so-called right-to-work laws.

“Some union leaders are worried that a Trump administration would attempt to introduce a national right-to-work law — allowing any employee anywhere to exempt themselves from participating in a union — and block unions from deducting dues from paychecks.”

Workers already have the option not to participate in a union. Workers cannot be compelled to join a union anywhere in the United States. They currently can be required to pay a representation fee in a workplace represented by a union. Under the law, a union is obligated to represent all the workers in a bargaining unit, whether or not they join the union. This means that all workers will benefit in the same way from the wages and benefits negotiated by the union. Also, the union is obligated to defend a worker in disciplinary matters or other individual issues even if they are not members of the union.

The issue is whether workers can be obligated to pay for this representation or have the option to get it for free. Twenty-six states now deny workers the right to negotiate contracts that require all workers to pay for the representation they get from a union. Apparently, some of those associated with Trump also want to prohibit workers from negotiating contracts under which the employer deducts union dues as a service to the union.

This is an issue about freedom of contract, where the government is limiting what sort of contracts unions can sign with an employer. It is not an issue about individual rights. Any worker who doesn’t like unions has the option to work at a workplace where employees are not represented by a union. Just as an employer can impose conditions on workers (for example, wearing a silly uniform or requiring workers to address customers in a particular way), current law allows contracts under which workers set conditions on employment for their co-workers. Apparently, people associated with Trump want to take away this right.

A NYT article that discussed Donald Trump’s conflict-of-interest problem because of his business empire somehow couldn’t find anyone who knew a way to do it without forcing him to risk selling it a large loss. Actually there are fun and easy way- to allow Donald Trump to quickly eliminate his conflict-of-interest problem without risking large losses. The article should have pointed out this fact to readers so they fully recognize how extraordinary Trump’s behavior is in ignoring his conflict-of-interest problem.

A NYT article that discussed Donald Trump’s conflict-of-interest problem because of his business empire somehow couldn’t find anyone who knew a way to do it without forcing him to risk selling it a large loss. Actually there are fun and easy way- to allow Donald Trump to quickly eliminate his conflict-of-interest problem without risking large losses. The article should have pointed out this fact to readers so they fully recognize how extraordinary Trump’s behavior is in ignoring his conflict-of-interest problem.

That would have been an appropriate headline for the NYT piece profiling Andrew Puzder, Donald Trump’s pick to be head of the Labor Department. According to the piece, Puzder, who runs a restaurant chain:

“…strongly supports repealing the Affordable Care Act, which he maintains has helped create a ‘restaurant recession’ because rising premiums have left middle- and working-class people with less money to spend dining out.”

In fact, restaurant spending and employment have risen rapidly since the key provisions of the Affordable Care Act (ACA) took effect in January of 2014 as shown in the figure below.

Jobs in Restaurants

restaurant jobsSource: Bureau of Labor Statistics.

Employment in restaurants in the most recent data is nearly 1 million higher than in December of 2013, the month before the health care exchanges created by the ACA began operating. Clearly Mr. Puzder is badly confused about business conditions in the restaurant sector. It would have been appropriate to point this fact out to readers, especially since it is very relevant to the job of the Labor Secretary.

 

Note: Thanks to Robert Salzberg for calling this to my attention.

That would have been an appropriate headline for the NYT piece profiling Andrew Puzder, Donald Trump’s pick to be head of the Labor Department. According to the piece, Puzder, who runs a restaurant chain:

“…strongly supports repealing the Affordable Care Act, which he maintains has helped create a ‘restaurant recession’ because rising premiums have left middle- and working-class people with less money to spend dining out.”

In fact, restaurant spending and employment have risen rapidly since the key provisions of the Affordable Care Act (ACA) took effect in January of 2014 as shown in the figure below.

Jobs in Restaurants

restaurant jobsSource: Bureau of Labor Statistics.

Employment in restaurants in the most recent data is nearly 1 million higher than in December of 2013, the month before the health care exchanges created by the ACA began operating. Clearly Mr. Puzder is badly confused about business conditions in the restaurant sector. It would have been appropriate to point this fact out to readers, especially since it is very relevant to the job of the Labor Secretary.

 

Note: Thanks to Robert Salzberg for calling this to my attention.

The NYT had a column by Nicholas Bagley and Austin Frakt noting the problem that in the current insurance market, all workers at a company get the same plan, regardless of their income. The price of the policy is a much larger share of a low-paid worker’s wage than a high-paid worker’s wage, implying a much larger effect on their after-health care insurance income.

As the column notes, a big part of this story is the high price of new medical technology. It is worth noting this high price is the result of government-granted patent monopolies. If the research were paid for up front by the government (it could be done by private companies under contract) the technology would be cheap in almost all cases. The differences between the cost of the most modern scanning equipment and an old-fashioned x-ray would be trivial and new drugs would be available at the same price as generics. In other words, this is to a large extent an avoidable problem, although one that cannot be easily addressed because of the power of the affected industries.

The NYT had a column by Nicholas Bagley and Austin Frakt noting the problem that in the current insurance market, all workers at a company get the same plan, regardless of their income. The price of the policy is a much larger share of a low-paid worker’s wage than a high-paid worker’s wage, implying a much larger effect on their after-health care insurance income.

As the column notes, a big part of this story is the high price of new medical technology. It is worth noting this high price is the result of government-granted patent monopolies. If the research were paid for up front by the government (it could be done by private companies under contract) the technology would be cheap in almost all cases. The differences between the cost of the most modern scanning equipment and an old-fashioned x-ray would be trivial and new drugs would be available at the same price as generics. In other words, this is to a large extent an avoidable problem, although one that cannot be easily addressed because of the power of the affected industries.

Want to search in the archives?

¿Quieres buscar en los archivos?

Click Here Haga clic aquí