That’s a cheap shot derived from the information that the NYT gave us at the end of Thomas Friedman’s column: “Maureen Dowd is off today.” Nonetheless it seems an appropriate response to a piece that tells real wages for most workers are stagnating because:
“In 2004, I wrote a book, called ‘The World Is Flat,’ about how the world was getting digitally connected so more people could compete, connect and collaborate from anywhere. When I wrote that book, Facebook, Twitter, cloud computing, LinkedIn, 4G wireless, ultra-high-speed bandwidth, big data, Skype, system-on-a-chip (SOC) circuits, iPhones, iPods, iPads and cellphone apps didn’t exist, or were in their infancy.
Today, not only do all these things exist, but, in combination, they’ve taken us from connected to hyperconnected.”
So Facebook and Twitter are the cause of wage inequality? I knew there was some reason Mark Zuckerberg rubbed me the wrong way.
Friedman also tells us:
“we have record productivity, wealth and innovation, yet median incomes are falling, inequality is rising and high unemployment remains persistent.”
Well the first part of this statement is almost always true. Except for short periods at the start of recessions, productivity always rises, implying greater wealth and presumably record innovation (not sure how that is measured).
Anyhow, it is not clear why Friedman finds anything surprising about this coinciding with high unemployment. Those of us who follow the economy would point to the fact that nothing has replaced the $1.2 trillion in annual construction and consumption demand that we lost when the housing bubble collapsed. And when we get more demand employment would grow, labor markets would tighten and we would see most workers in a position to get higher wages. There is no mystery here to folks who know basic economics and a bit of arithmetic.
Friedman wants people to have:
“more P.Q. (passion quotient) and C.Q. (curiosity quotient) to leverage all the new digital tools to not just find a job, but to invent one or reinvent one, and to not just learn but to relearn for a lifetime.”
Yeah, it would be great if people had more passion, curiousity and learned more, but it’s not clear that this would affect wages much for the 14.9 million people working in retail, the 10 million people employed in restauarants and the 1.8 million employed in hotels. In other words, even in Friedman’s hyperconnected world, a very high percentage of jobs still do not offer many opportunities for passion, curiousity, and learning.
The reason that these people are not sharing in the benefits of productivity growth, as they did in the period from 1945 to 1973 is that the folks controlling economic policy lack passion, curiousity and an interest in learning. They think it’s just fine that we waste $1 trillion a year due to an economy that is below full employment and that 15 million people are unemployed and underemployed.
Anyhow, maybe we can get the NYT to fix that line about Maureen Dowd.
That’s a cheap shot derived from the information that the NYT gave us at the end of Thomas Friedman’s column: “Maureen Dowd is off today.” Nonetheless it seems an appropriate response to a piece that tells real wages for most workers are stagnating because:
“In 2004, I wrote a book, called ‘The World Is Flat,’ about how the world was getting digitally connected so more people could compete, connect and collaborate from anywhere. When I wrote that book, Facebook, Twitter, cloud computing, LinkedIn, 4G wireless, ultra-high-speed bandwidth, big data, Skype, system-on-a-chip (SOC) circuits, iPhones, iPods, iPads and cellphone apps didn’t exist, or were in their infancy.
Today, not only do all these things exist, but, in combination, they’ve taken us from connected to hyperconnected.”
So Facebook and Twitter are the cause of wage inequality? I knew there was some reason Mark Zuckerberg rubbed me the wrong way.
Friedman also tells us:
“we have record productivity, wealth and innovation, yet median incomes are falling, inequality is rising and high unemployment remains persistent.”
Well the first part of this statement is almost always true. Except for short periods at the start of recessions, productivity always rises, implying greater wealth and presumably record innovation (not sure how that is measured).
Anyhow, it is not clear why Friedman finds anything surprising about this coinciding with high unemployment. Those of us who follow the economy would point to the fact that nothing has replaced the $1.2 trillion in annual construction and consumption demand that we lost when the housing bubble collapsed. And when we get more demand employment would grow, labor markets would tighten and we would see most workers in a position to get higher wages. There is no mystery here to folks who know basic economics and a bit of arithmetic.
Friedman wants people to have:
“more P.Q. (passion quotient) and C.Q. (curiosity quotient) to leverage all the new digital tools to not just find a job, but to invent one or reinvent one, and to not just learn but to relearn for a lifetime.”
Yeah, it would be great if people had more passion, curiousity and learned more, but it’s not clear that this would affect wages much for the 14.9 million people working in retail, the 10 million people employed in restauarants and the 1.8 million employed in hotels. In other words, even in Friedman’s hyperconnected world, a very high percentage of jobs still do not offer many opportunities for passion, curiousity, and learning.
The reason that these people are not sharing in the benefits of productivity growth, as they did in the period from 1945 to 1973 is that the folks controlling economic policy lack passion, curiousity and an interest in learning. They think it’s just fine that we waste $1 trillion a year due to an economy that is below full employment and that 15 million people are unemployed and underemployed.
Anyhow, maybe we can get the NYT to fix that line about Maureen Dowd.
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Floyd Norris is worried about a sharp drop in consumer confidence. He shouldn’t be.
The cause of the drop is a fall in consumer expectations about the future. Expectations jump around because most people aren’t in the business of sitting down and thinking about where the economy will be in 6 months. For the most part, people answer this question based on what they hear in the news. Since news reporting on the economy is very fickle, people’s views about the future are very fickle.
Fortunately, expectations have very little impact on people’s consumption decisions. Their consumption is far more stable, indicating that people rely on their current economic situation — wages, job security, housing equity — in making their consumption decisions and they largely ignore the folks seen and heard pontificating in the media.
Floyd Norris is worried about a sharp drop in consumer confidence. He shouldn’t be.
The cause of the drop is a fall in consumer expectations about the future. Expectations jump around because most people aren’t in the business of sitting down and thinking about where the economy will be in 6 months. For the most part, people answer this question based on what they hear in the news. Since news reporting on the economy is very fickle, people’s views about the future are very fickle.
Fortunately, expectations have very little impact on people’s consumption decisions. Their consumption is far more stable, indicating that people rely on their current economic situation — wages, job security, housing equity — in making their consumption decisions and they largely ignore the folks seen and heard pontificating in the media.
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This is yet another case where the free market fundamentalists are using big government to fatten their profits. Associated Press has a nice piece on how several states are paying their unemployment insurance benefits through electronic cards issued by banks rather than checks or direct deposits. The banks place various fees on these cards that people with bank accounts, who are most of the unemployed, would not otherwise see. Needless to say, these banks are very happy with big government and would be very much opposed to an efficient more market based mechanism for paying benefits.
This is yet another case where the free market fundamentalists are using big government to fatten their profits. Associated Press has a nice piece on how several states are paying their unemployment insurance benefits through electronic cards issued by banks rather than checks or direct deposits. The banks place various fees on these cards that people with bank accounts, who are most of the unemployed, would not otherwise see. Needless to say, these banks are very happy with big government and would be very much opposed to an efficient more market based mechanism for paying benefits.
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When the Post ran a piece on the lessons that Harley-Davidson teaches us about the economy readers naturally assumed that it would mention it as an example of successful protectionism. In 1982, in the middle of a steep recession, President Reagan imposed tariffs on imported motorcycles. This gave Harley-Davidson the breathing room it needed to survive the recession and modernize its operations. It continues to be a healthy profitable company.
Anyhow, this history didn’t make the Post’s list, but the other items are nonetheless interesting.
When the Post ran a piece on the lessons that Harley-Davidson teaches us about the economy readers naturally assumed that it would mention it as an example of successful protectionism. In 1982, in the middle of a steep recession, President Reagan imposed tariffs on imported motorcycles. This gave Harley-Davidson the breathing room it needed to survive the recession and modernize its operations. It continues to be a healthy profitable company.
Anyhow, this history didn’t make the Post’s list, but the other items are nonetheless interesting.
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That’s what listeners to a segment this morning on households’ lack of adequate savings probably concluded. The piece noted that many households lack the savings needed to support themselves through a period of unemployment or illness. It then talked about various efforts to promote savings.
While it would be beneficial for most people to save more (although it would hurt the economy in the short-run), a major problem is the large fees charged by financial institutions. Fees can eat up as much as one-third of the money in 401(k)-type accounts. It would have been worth at least mentioning the problem of high bank fees as an issue in this discussion.
That’s what listeners to a segment this morning on households’ lack of adequate savings probably concluded. The piece noted that many households lack the savings needed to support themselves through a period of unemployment or illness. It then talked about various efforts to promote savings.
While it would be beneficial for most people to save more (although it would hurt the economy in the short-run), a major problem is the large fees charged by financial institutions. Fees can eat up as much as one-third of the money in 401(k)-type accounts. It would have been worth at least mentioning the problem of high bank fees as an issue in this discussion.
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Can we get a heaping helping of ridicule for all the reporters and their favorite economic experts who told us that uncertainty over the fiscal cliff was a drag on the economy in the second half of 2012? The data just refuse to comply with this assessment.
Yesterday the Commerce Department reported a big jump in durable goods orders for the month of December. This was right when we stood at the precipice waiting to see if we would slide over the cliff. Orders jumped 4.6 percent for the month. Non-defense capital good orders (excluding aircraft) were up also, although by just 0.2 percent. However, this followed a 3.0 percent rise in November. If uncertainty was supposed to be discouraging investment, the folks making the orders apparently didn’t get the memo.
This also seems to have been the case with employers, since employment increased by 155,000 in December, the same as its average over the last year. Retail sales also rose by a strong 0.5 percent, indicating that consumers were also too dumb to recognize the uncertainty caused by the fiscal cliff.
In short, it seems that the folks who make the relevant economic decisions did not agree with the economic experts. They ignored the uncertainty surrounding the fiscal cliff and just acted as though the boys and girls in Washington would get things worked out without seriously disrupting the economy. And they were right.
Addendum:
Big congrats to Neil Irwin at the Post for nailing this one exactly right today and fessing up to his past mistakes in covering the cliff.
Can we get a heaping helping of ridicule for all the reporters and their favorite economic experts who told us that uncertainty over the fiscal cliff was a drag on the economy in the second half of 2012? The data just refuse to comply with this assessment.
Yesterday the Commerce Department reported a big jump in durable goods orders for the month of December. This was right when we stood at the precipice waiting to see if we would slide over the cliff. Orders jumped 4.6 percent for the month. Non-defense capital good orders (excluding aircraft) were up also, although by just 0.2 percent. However, this followed a 3.0 percent rise in November. If uncertainty was supposed to be discouraging investment, the folks making the orders apparently didn’t get the memo.
This also seems to have been the case with employers, since employment increased by 155,000 in December, the same as its average over the last year. Retail sales also rose by a strong 0.5 percent, indicating that consumers were also too dumb to recognize the uncertainty caused by the fiscal cliff.
In short, it seems that the folks who make the relevant economic decisions did not agree with the economic experts. They ignored the uncertainty surrounding the fiscal cliff and just acted as though the boys and girls in Washington would get things worked out without seriously disrupting the economy. And they were right.
Addendum:
Big congrats to Neil Irwin at the Post for nailing this one exactly right today and fessing up to his past mistakes in covering the cliff.
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The NYT tells us that biotech firms want the government to prohibit pharmacists from giving patients generic substitutes for biological drugs. This is a great story for a couple of reasons.
First it is a great example of the sort of abuses that economic theory predicts would result from having the government grant patent monopolies. When companies call sell drugs for prices that are a hundred or even a thousand times their cost of production, we should expect that they will lie, cheat, and steal to expand their market. And the drug companies largely act exactly as economic theory, if not economists, predicts.
The other reason this is a great story is that it shows the complete indifference to free market principles held by big business. Are the folks who want to arrest pharmacists for substituting generics “market fundamentalists?”
Note that the sums of money involved in the industry swamp the chump change that many liberals fight over. The article cites data showing drug industry sales at $320 billion a year. They would be around one-tenth this amount without patent and other protections provided by the government, a difference of $290 billion. By comparison, the entire food stamp program cost $87 billion in 2012, less than one-third this amount. Federal spending on TANF is around $17 billion, less than one-tenth of this amount.
This is a great example of how the rich rig rules to get all the money. Then they let the loser liberals run around saying that we need the government to help the poor.
Addendum: Zev Arnold pointed out in his comment that I orginally had the number of beneficiaries (47 million) rather than the amount of spending for Food Stamps.
The NYT tells us that biotech firms want the government to prohibit pharmacists from giving patients generic substitutes for biological drugs. This is a great story for a couple of reasons.
First it is a great example of the sort of abuses that economic theory predicts would result from having the government grant patent monopolies. When companies call sell drugs for prices that are a hundred or even a thousand times their cost of production, we should expect that they will lie, cheat, and steal to expand their market. And the drug companies largely act exactly as economic theory, if not economists, predicts.
The other reason this is a great story is that it shows the complete indifference to free market principles held by big business. Are the folks who want to arrest pharmacists for substituting generics “market fundamentalists?”
Note that the sums of money involved in the industry swamp the chump change that many liberals fight over. The article cites data showing drug industry sales at $320 billion a year. They would be around one-tenth this amount without patent and other protections provided by the government, a difference of $290 billion. By comparison, the entire food stamp program cost $87 billion in 2012, less than one-third this amount. Federal spending on TANF is around $17 billion, less than one-tenth of this amount.
This is a great example of how the rich rig rules to get all the money. Then they let the loser liberals run around saying that we need the government to help the poor.
Addendum: Zev Arnold pointed out in his comment that I orginally had the number of beneficiaries (47 million) rather than the amount of spending for Food Stamps.
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It probably would have been useful to remind readers that Representative Paul Ryan’s claim that country is facing a fiscal crisis is sharply at odds with the views of market participants in a NYT article reporting on his latest interview. The article quotes Ryan:
“I don’t think that the president thinks that we actually have a fiscal crisis, … He’s been reportedly saying to our leaders that we don’t have a spending problem, we have a health care problem. That just leads me to conclude that he actually thinks we just need more government-run health care.”
Of course the fact that investors are willing to lend the U.S. government trillions of dollars for long periods of time for interest rates of less than 2.0 percent indicates that the markets do not believe the United States has a fiscal crisis. Also, it is a fact that if the United States had per person health care costs that were at all comparable to those in other wealthy countries that it would be looking at long-term budget surpluses, not deficits.
It would have been worth reminding readers that Mr. Ryan has no evidence to support his assertions that the United States somehow has a fiscal crisis or that fixing our health care system would not address its projected long-term deficit problem. Readers might be mistakenly led to believe that Ryan’s position has a basis in reality.
It probably would have been useful to remind readers that Representative Paul Ryan’s claim that country is facing a fiscal crisis is sharply at odds with the views of market participants in a NYT article reporting on his latest interview. The article quotes Ryan:
“I don’t think that the president thinks that we actually have a fiscal crisis, … He’s been reportedly saying to our leaders that we don’t have a spending problem, we have a health care problem. That just leads me to conclude that he actually thinks we just need more government-run health care.”
Of course the fact that investors are willing to lend the U.S. government trillions of dollars for long periods of time for interest rates of less than 2.0 percent indicates that the markets do not believe the United States has a fiscal crisis. Also, it is a fact that if the United States had per person health care costs that were at all comparable to those in other wealthy countries that it would be looking at long-term budget surpluses, not deficits.
It would have been worth reminding readers that Mr. Ryan has no evidence to support his assertions that the United States somehow has a fiscal crisis or that fixing our health care system would not address its projected long-term deficit problem. Readers might be mistakenly led to believe that Ryan’s position has a basis in reality.
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