It is amazing that there is not an effort to have a mass deportation of economists. After all, almost the whole profession completely missed the housing bubble and the economic crisis that resulted from its collapse. They failed to see the weakness of the recovery and now they can't decide whether we will have too few workers or too few jobs. (This is known as the "which way is up?" problem in economics.)

Claire Cain Miller gave us a "too few jobs" story in her NYT column that asked how we can offset the impact of job killing robots. She discusses various ideas that will create jobs or generate incomes for the people displaced by robots.

It is worth noting that if we think the problem really is too few jobs, in effect, that productivity is soaring, then many other commonly discussed economic problems do not really exist. If we have too few jobs then we have no reason to worry about government budget deficits. The problem of government budget deficits (if there is one) is that excessive spending by the government is creating too much demand in an economy that is unable to supply enough goods and services.

Similarly, in the too few jobs story there is no reason to worry about the demographics of retiring baby boomers. That is a story of too few workers to care for a growing population of retirees. 

There is also no reason to worry about the burden of excessive regulations stifling growth. The too few jobs story is telling us that the robots are leading to mass displacement of workers in spite of whatever burden is created by regulations. The implication is that we would have even if fewer jobs if not for the burden of regulations (assuming that regulations actually do slow growth).

And of course, if the problem is the robots taking all the jobs there is no reason for the Federal Reserve Board to raise interest rates. The point of higher interest rates is slow the rate of job creation so that the labor market doesn't get too tight and cause inflation. If we are worried that robots are getting rid of all the jobs it doesn't make any sense for the Fed to deliberately make the problem worse by slowing the rate of job creation.

It would be nice if economists could either agree than we face a world of soaring productivity so that scarcity is not a problem or (as the data show) we face a world of weak productivity growth, so that we could face some problems of scarcity. Given the high average pay in the profession, it would be reasonable to think there could be some consensus or at least some clear thinking on the implications of each position.

In the years before the Affordable Care Act (ACA) the uninsured population peaked at just over 50 million people. It fell sharply when the main provisions of the ACA took effect, falling to less than 28 million in recent quarters. However, in its effort to make America great again, the Republicans expect to raise the number of uninsured back above 50 million. Serious analysis of their plan shows that they have a good shot at meeting this goal.

While the Republicans are in principle keeping some of the provisions of the ACA that were responsible for lowering the number of uninsured, this effect will be temporary. In most cases, the situation for most people not covered by their employers will be the same or worse than before the ACA took effect.

For example, the plan leaves in place the expansion of Medicaid through 2020. This should be long enough so that most currently serving Republican governors will not have to deal with the effect of the elimination of this provision. After 2020 people benefiting from the expansion will be allowed to remain on Medicaid, but new people will not be added. Since people tend to shift on and off Medicaid (something rarely understood by reporters who cover the ACA), after two or three years the vast majority of the people who benefited from the expansion will no longer be getting Medicaid. By 2025, the impact of the expansion on the number of the uninsured will be trivial.

The plan also allows insurers to charge people with pre-existing conditions higher rates, if they allow their insurance to lapse. While the provision allowing people to avoid being penalized for pre-existing conditions, if they maintain continuous coverage, may appear to provide protection, in reality this is not likely to be the case. Before the ACA workers were allowed to keep employer based coverage for a substantial period of time after they left their employer under COBRA. The take up rate under this law was always low, primarily because most workers could not afford to keep their coverage once they left their jobs. This is likely to be the case when the Republican plan takes effect as well.

Dean Baker
Truthout, March 6, 2017

March 2017, Dean Baker and Cherrie Bucknor

Dean Baker
The Hankyoreh, March 5, 2017

Tony Blair, the former Prime Minister of the United Kingdom, who is best known for lying his country into participating in the Iraq War, lectured NYT readers on the evils of populism. Once again he gets many key points wrong.

He criticizes the left for abandoning centrist politicians:

"One element has aligned with the right in revolt against globalization, but with business taking the place of migrants as the chief evil. They agree with the right-wing populists about elites, though for the left the elites are the wealthy, while for the right they’re the liberals."

Blair then tells us:

"The center needs to develop a new policy agenda that shows people they will get support to help them through the change that’s happening around them. At the heart of this has to be an alliance between those driving the technological revolution, in Silicon Valley and elsewhere, and those responsible for public policy in government. At present, there is a chasm of understanding between the two. There will inevitably continue to be a negative impact on jobs from artificial intelligence and big data, but the opportunities to change lives for the better through technology are enormous.

"Any new agenda has to focus on these opportunities for radical change in the way that government and services like health care serve people. This must include how we educate, skill and equip our work forces for the future; how we reform tax and welfare systems to encourage more fair distribution of wealth; and how we replenish our nations’ infrastructures and invest in the communities most harmed by trade and technology."

Blair obviously is unfamilair with the basic facts about the economy. For example, even workers with college degree have seen almost no growth in real wages in this century. And with a large dispersion of earnings among male college grads, the bottom quartile of grads don't really see any premium at all.

But more importantly, Blair is wrong when he treats globalization and technology as natural forces. The decision to put our manufacturing workers in direct competition with low paid workers in the developing world, while leaving doctors, dentists and other highly paid professionals largely protected, is a policy choice. It's predicted and actual effect is to put downward pressure on the wages of most of the workforce, while benefitting the small elite in the protected occupations.

Mark Weisbrot
The Huffington Post Quebec, 7 mars, 2017

February 2017, Eileen Appelbaum

February 2017, Dean Baker

Alexander MainThe Hill, March 2, 2017

Guidelines from the Department of Housing and Urban Development recommend that households spend no more than 30 percent of their income on housing. The reality, however, is that over half of U. S. households spend more than that. A burden which the department notes can cause households to struggle to afford “necessities such as food, clothing, transportation and medical care”.

CEPR compared Fair Market Rent for a one-bedroom appartment in some of the U.S.’s largest metropolitan areas to monthly income based on each city’s minimum wage to get a more accurate picture of housing costs for the majority of the population.

Unsurprisingly, San Francisco, CA wins as the “most unaffordable” city to live in based on this data analysis. One month of full-time minimum wage work at $13 an hour would net the worker $2,080 and their fair market rent would be $2,411, or 116 percent of their monthly income. This disparity puts San Francisco a full 30 percentage points above second-place contender, Philadelphia. At the opposite end of the spectrum, full-time minimum wage workers in Dallas, TX earn $1,160 at $7.25 per hour and pay 41 percent of it, $679, in fair market rent. This is the lowest percentage of any of the cities analyzed, although it is still well above the 30 percent federal guideline.

Mark WeisbrotThe Hill, March 1, 2017

By Dean Baker and Sarah Rawlins

Many of us had very mixed feelings about the Donald Trump Carrier show, where he got the Carrier Air Conditioner company to keep 800 jobs at one of its plants in Indiana instead of shipping them to Mexico. The state of Indiana, under then Governor Mike Pence, promised millions of dollars in tax concessions as an inducement. There were also reports of threats or promises directed towards Carrier's parent company, United Technologies, which is a major military contractor.

While it was good to see these 800 workers keeping their jobs, this is not the way to protect U.S. manufacturing jobs. At the end of the day, 800 jobs is just a drop in the bucket in a labor force of 150 million or even among the 12.3 million people employed in manufacturing.

We can't expect the president of the United States to be running around from factory to factory to make sure that manufacturing jobs stay in the United States. What we need is a policy.

Fortunately, there is a policy that would discourage companies from shutting down the shop and sending jobs elsewhere: it's called "severance pay." That might not sound new and sexy, because it isn't, but it can radically alter the incentives for employers.

Suppose that workers were entitled to two weeks of severance pay for every year they work for a company. This means that workers who have been employed for over twenty years, as was the case with many of the Carrier workers, would be entitled to at least 40 weeks of severance pay.

This won't get someone in their early fifties through to retirement, but it certainly is a nice going away gift. More importantly, it changes the incentives for company. If a company knows that it will be costly to lay off a large number of long-term workers, it might think harder about ways to keep them employed. This could mean continual retraining to maintain their skills and investment in the most modern equipment to ensure high levels of productivity.

Of course, if a company really has no productive use for a worker, it will still pay to lay them off, but this will not be a decision taken lightly. In effect, we are requiring the company to internalize the cost to the worker and society, since there is a high risk that an older worker who loses their job will be unemployed for a long period of time, collecting unemployment insurance and other benefits.

It's amazing how it is so acceptable in elite circles to tell outright lies to advance the trade agenda pursued by recent administrations. Everyone remembers when a 2007 Washington Post editorial touting NAFTA claimed that Mexico's economy had quadrupled between 1987 to 2007. According to the I.M.F., the actual figure was 83 percent. The erroneous number can still be found online, since the Post lacks the integrity to correct it.

In this vein we find David Ignatius continuing the Post's denialism, telling readers that workers in the Midwest are wrong to think that trade cost manufacturing jobs.

"Manufacturing employment has indeed declined in America over the past decade, but the major reason is automation, not trade. Robots, not foreign workers, are taking most of the disappearing American jobs. Rather than helping displaced blue-collar workers, Trump’s promises of restoring lost jobs could leave them unprepared for the much bigger wave of automation and job loss that’s ahead.

"The most persuasive numbers were gathered in 2015 by Michael J. Hicks and Srikant Devaraj at Ball State University. They showed that manufacturing has actually experienced something of a revival in the United States. Despite the Great Recession, manufacturing grew by 17.6 percent, or about 2.2 percent a year, from 2006 to 2013. That was only slightly slower than the overall economy.

"But even as manufacturing output was growing, jobs were shrinking. The decade from 2000 to 2010 saw “the largest decline in manufacturing employment in U.S. history,” the Ball State economists concluded. What killed those jobs? For the most part, it wasn’t trade, but productivity gains from automation. Over the decade, the report notes, productivity gains accounted for 87.8 percent of lost manufacturing jobs, while trade was responsible for just 13.4 percent."

The basic story is that we have had automation for a century. Productivity growth has always meant that fewer manufacturing workers could produce the same amount of output. In the decades of the fifties and sixties, when productivity growth was far more rapid than it has been recent years, it was associated with rising wages and low unemployment. Productivity growth is not new and is usually good for workers.

What was new in the years from 2000 to 2007, when we lost over 3 million manufacturing jobs, was the explosion in the trade deficit.