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Article Artículo

NYT's David Leonhardt Does Mind Reading on Hillary Clinton

It is amazing how many reporters want to be mind readers. I guess it's hard to make a living as a mind reader. Anyhow, David Leonhardt took some steps in the mind reading direction when he told readers:

"They both [President Obama and Hillary Clinton] consider the stagnant incomes of recent decades to be a defining national issue. They both want to address the stagnation through a combination of government programs and middle-class tax cuts. They both see climate change as a serious threat. They both think workers have too little power and corporations too much."

Wow, so David Leonhardt knows what President Obama and Hillary Clinton really "consider," "want," "see," and "think." That's impressive, but readers may want to be somewhat skeptical. After all, most of us recognize that politicians don't always reveal their true thoughts. We know what they say their priorities are, but only a mind reader would try to tell us what they really think.

There are also some objective facts that provide some basis for skepticism on this topic. First, many of the big winners from rising inequality are friends and campaign contributors to Hillary Clinton (and Barack Obama). It's possible that they both want to pursue policies that would take away large amounts of money from these people, but some folks may question this fact.

Also, the incredibly narrow list of policies that Leonhardt says is on Clinton's plate indicates that she probably is not serious about reducing inequality and promoting middle class wage growth. For example, many of the highest incomes in the economy are in the financial sector. If Clinton were serious about attacking inequality it is hard to believe that she would not be promoting a financial transactions tax. This could raise as much as $180 billion a year (more than $2 trillion over a decade). This money would come almost entirely out of the pockets of the high rollers in the financial industry. It would also increase economic efficiency and growth. Since Clinton has never indicated any interest in financial transactions taxes it is difficult to believe that she has much interest in countering inequality.

Dean Baker / March 15, 2015

Article Artículo

Globalization and Trade

Getting It Wrong on Trade: TPP Is Not Good for Workers

The big money is sweating big time since it seems large segments of the American public have caught wind of the Obama administration's plans for the Trans-Pacific Partnership. After several decades in which trade has been a major factor depressing the wages and living standards of the country's workers, the Obama administration is going back to the well to push for more.

The immediate goal is the Trans-Pacific Partnership (TPP), which includes a number of countries in Asia and Latin America. While it excludes major countries like China and India, the explicit intention is to expand the pact so that these countries will eventually be included. This fact is important in assessing this deal.

For example, the Washington Post (which has a religious devotion to these sorts of trade deals) ran a column by three prominent economists, David Autor, David Dorn, and George Hanson (ADH), which tells readers the TPP is good for the country's workers. ADH is an interesting team to make this argument since they have written several papers showing that our patterns of trade have been an important force depressing the wages of a large segment of the U.S. workforce.

ADH start out by saying that manufacturing workers have little to lose in this deal because tariffs with the countries in the pact are already near zero, therefore we will not be opening ourselves to new competition if the few remaining barriers are eliminated. Here is where the possibility of expansion is important.

Many prominent economists, including many strongly pro-trade economists like Fred Bergsten, the former president of the Peterson Institute for International Economics, have argued the TPP should include rules on currency manipulation. While this may not be a big issue with most of the countries in this round, it is certainly a big deal with China and other countries that could join. According to calculations by Bergsten and others, actions of foreign central banks to raise the value of the dollar have added several hundred billions of dollars to our trade deficit and cost us millions of manufacturing jobs.

Dean Baker / March 14, 2015

Article Artículo

Ecuador

Latin America and the Caribbean

Venezuela

World

Breaking News: The New York Times Reports on What the Rest of the Western Hemisphere Thinks About the Conflict Between the US and Venezuela
In a significant change in reporting at The New York Times, the newspaper yesterday became the first major news outlet in the English language media to report on what the rest of the governments in the Western Hemisphere think of U.S. policy toward Venezu

Mark Weisbrot / March 13, 2015

Article Artículo

The Real Rate of Recovery, Part 1: The Jobless Rate
Many media outlets cite the official unemployment rate—the Bureau of Labor Statistics’ U-3 unemployment rate—when reporting on the recovery in the jobs market. This rate stood at 5.0 percent in December 2007 (the first month of the recession) and rose to

Kevin Cashman and Nicolas Buffie / March 12, 2015

Article Artículo

Affordable Care Act

The ACA Is Helping Workers
Two months ago, I argued that the Affordable Care Act isn't forcing firms to cut hours. Rather, the law gives workers the ability to pursue part-time employment if they so desire -- an improvement over the previous system, in which workers had to be full-

Nick Buffie / March 11, 2015

Article Artículo

Globalization and Trade

Fun With Brad DeLong on TPP

Brad thinks he has a winner policy with TPP, taking issue with Paul Krugman who says the deal is not worth doing. Brad argues that even if the deal is worth half of the 0.5 percent of GDP figure that is widely cited, we are still talking about 0.25 percent of GDP, or $75 billion a year for the region as a whole and $45 billion for the U.S.

He acknowledges that these gains may not be spread evenly, but wants to see evidence that the losses to workers would be larger than their share of this $75 billion. He also notes Krugman's complaint about increased protection for intellectual property, especially drug patents, and wants to see evidence that these losses will be large enough to offset the $75 billion in annual gains. Okay, let's take the DeLong challenge.

First, one of the issues raised by many TPP opponents is that it will almost certainly have nothing on currency. This mean that it will not make it any easier, and could well make it more difficult, for the United States to address the trade deficit that results from having an over-valued dollar. Whether or not that ends up being the case is of course speculative, but this could be a very big deal.

As some folks have argued, the United States has faced a serious problem of secular stagnation, meaning it does not have enough demand to bring the economy to full employment. In principle this problem can be easily addressed by a big government stimulus program. But we don't live in principle, we live in Washington, where no one in a position of power is prepared to talk about big increases in the government deficit. Hence, secular stagnation is a real live problem.

Dean Baker / March 11, 2015