Dylan Mathews promised that "this chart will change how you think about U.S. manufacturing." The piece actually has two charts, but neither rises to the bar.

Both charts come from a new book by Robert Z. Lawrence and Lawrence Edwards: Rising Tide: Is Growth in Emerging Economies Good for the United States?. I've not seen the book, but I am familiar with Lawrence as a long-time optimist about the state of the economy and one who pooh poohs the idea that trade might hurt large segments of the workforce. He also seems prepared to ignore substantial evidence, using standard methodology, that shows it does.

Anyhow, the first chart shows a trend line with a rapid decline in manufacturing over the last 5 decades. According to the chart, we are pretty much right on trend. I hate to be picky here, but the fitted portion of the trend-line, which runs from 1961 to 1979, lies almost entirely above the actual data points for these years. That is not supposed to happen, which makes one wonder a bit about this trend. One might also wonder whether it is reasonable to expect a linear relationship. Will manufacturing employment really be zero in 26 years? We might expect a flattening curve as the manufacturing employment share gets small.

But let's leave these quibbles aside, the more striking part is the second graph that tells us the decline in manufacturing is happening everywhere. The chart shows us that Germany, the Netherlands, and Sweden also had sharp declines in manufacturing employment since 1973.

Let's just pick Germany here for comparison purposes. Eyeballing the chart we see that the manufacturing share of employment in Germany fell from roughly 36 percent in 1973 to 24 percent in 2011. Let's call it a decline of one-third.

Dean Baker
The Guardian Unlimited, March 25, 2013

Dean Baker
Truthout, March 25, 2013

Well, at least someone is. Let's look at his case:

"The long-dormant housing market is reviving. Home prices and sales are up; homebuilders are increasing production to satisfy rising demand. Personal finances have improved. Loans have been repaid or written off. Since year-end 2009, the ratio of household debt to disposable income has dropped from 130?percent to 111 percent, according to Federal Reserve data. It’s probably still declining. Over the same period, a rising stock market and higher home values have increased household wealth by almost $10 trillion.

"The other piece of good news is the job market. 'The last five months .?.?. we’ve seen over 200,000 jobs a month in the private sector,' Fed Chairman Ben Bernanke noted last week at a news conference. 'Unemployment [insurance] claims are at the lowest level they’ve been since the crisis.'

"So two large sources of middle-class anxiety and insecurity — jobs and wealth — are slowly easing. The share of 'underwater' homeowners (with mortgages exceeding the value of their homes) has dropped from 21.2 percent in mid-2009 to 14.8 percent in the third quarter of 2012, reports Moody’s Analytics."

Starting with the household debt story, it is important to realize that consumption was unusually high relative to disposable income at the peak of the bubble. It is unlikely to return to such heights unless the bubble returns, which it is not close to doing (thankfully in my view). The vast majority of the wealth created since 2009 has been in the stock market which has doubled in value. The housing market, which was still falling in 2009, is roughly back to its 2009 levels.

Nope, I'm not kidding. In his column today, Hiatt complained that no one seems to be moving forward on his deficit reduction agenda. He then told readers:

"What could shake them out of their own devices? One possibility, a fiscal hawk in the Obama administration told me almost wistfully, would be a 'minor market event.' A stock market plunge, an interest rate spike, a race to the exits by America’s foreign lenders — just enough to spook Congress.

"But as long as the Federal Reserve is gobbling up U.S. debt to keep interest rates low, such a mishap seems unlikely."

Yes, it must be awful when you have a view of the economy that the economy refuses to corroborate. (In fairness, Hiatt, does add that such a market event could spin out of control, so "it is not really to be wished for.")

As usual, Hiatt is upset that President Obama is not pushing hard enough for cuts to Social Security and Medicare. While he does give Obama credit for proposing some cuts to Medicare (what happened to the chained CPI?), what really has him upset is that President Obama doesn't talk about inflicting pain:

As we get our latest dose of euro crisis thrills with the battle of the Cypriot banks, it might be a good time and step back to reflect on the havoc wreaked by the European Central bankers. While the double-digit unemployment rates throughout much of the region have grabbed headlines, if we flip the picture over and look at employment rates we see a somewhat more complicated picture.

First, if we look at employment population ratios for the adult population as a whole (ages 16-64), the euro zone story does not look especially dire.  

Source: OECD.

If we want to do a direct comparison of employment population ratios (EPOP) for the euro zone as a whole, the relevant lines are the top line and the third line. In 2006 the United States had an EPOP for its adult population of 72.0 percent compared to 64.6 percent for the euro zone as a whole. By 2011 most of this gap had closed as the EPOP for the U.S. had dropped to 66.6 percent compared to 64.3 percent for the euro zone.

The closing of this gap is the story of two Europes. The north, led by Germany, has seen a rise in its EPOP since the downturn. While Germany had an EPOP in 2006 that was 4.8 percentage points below that of the U.S., in 2012 data (not on the chart), its EPOP was more than 6 pp higher.

It's apparently hard to find out about the state of the U.S. economy in the nation's capital. That is the only way to explain the fact that in their articles on the budget passed by the Senate last night, neither the NYT or Washington Post said one word about how the budget would affect the economy over the next decade.

This one should have been pretty basic and simple. As tens of millions of graduates of intro economics classes know, GDP is equal to the sum of consumption, investment, government spending and net exports. Currently, annual GDP is close to $1 trillion below its potential according to the estimate from the Congressional Budget Office because private sector demand plunged following the collapse of the housing bubble.

While conservative politicians run around yelling mumbo jumbo about making the job creators happy, there is no plausible story that private sector demand will rise enough to fill this gap any time soon. That means that government has to fill the gap by running large deficits. Its failure to do so has meant that the economy is down almost 9 million jobs from its trend growth path and millions of people are needlessly suffering from unemployment.

However, neither the NYT or Post could be bothered mentioning the millions who are suffering unemployment as the direct result of government policy. Instead the NYT told us in the first sentence that the budget will:

"trim spending gingerly and leave the government still deeply in the debt a decade from now."

Yes, that is important for readers to know -- by the NYT's criteria the country will be "deeply in debt" a decade from now. What ever happened to the distinction between news and opinion pages?

The Organization of American States (OAS) is set to take up proposed reforms to the Inter-American Commission on Human Rights (IACHR) today at 11:00am EDT (live feed here). While arguments against the reforms have received column space in major U.S. media outlets, little attention has been granted to some of the criticisms laid out by the Ecuadorean government, which has been leading the effort for IACHR reform.

In a presentation [Spanish PDF here; English PDF here] to OAS members in Guayaquil on March 11, Ecuadorean President Rafael Correa pointed out that Ecuador is one of seven countries to have “subscribed in absolute terms” to all of the Inter-American human rights instruments, noting that:

Here, torture is not allowed, there is no death penalty, we have not invaded anyone at all, no drone and selectively killing terrorism suspects without trials, along with "collateral damage" as family, neighbors, etc. In Ecuador, as in all true State of Law, we pursue crime, not people, but precisely because it is already a real State of Law, and no one can be above the Law, which disturbs the supremacy powers.

Correa noted that only 24 of 34 states have ratified the “fundamental document” of the American Convention on Human Rights – the “San Jose Pact” that led to the creation of two bodies, the Inter-American Court of Human Rights and the Inter-American Commission on Human Rights. Consequently, he states, only for those 24 countries are the organizations’ decisions binding.

The strong asymmetry between countries attached to the Convention versus those who finance and manage, has come to a completely perverting tool that was initially developed for the benefit of each and every American. Instead of this, some countries plan to intervene in other countries, while judges hide behind immunity by not being under the jurisdiction of the system and especially of the Court.

Correa pointed out a number of contradictions within the Inter-American system, such as that the Inter-American Commission is based in “a country that is not a part of the Inter-American Human Rights System, and that has ratified none of the inter-American human rights instruments” – the United States.

One of the reasons that many proponents give for supporting a financial transactions tax (FTT) is that it will reduce trading volume in financial markets. This can be considered good for two reasons.

First it may reduce the likelihood of erratic fluctuations that have no basis in the fundamentals like the flash crash in the spring of 2010. The existence of a huge amount of rapidly traded assets can create this sort of sudden divergence from fundamental driven prices. Reducing trading volume may reduce the probability of similar occurrences.

The other reason that a reduction in trading volume is desirable is that it would reduce the amount of resources wasted in the financial sector. The labor and capital absorbed in trading are resources that could in principle be used productivity elsewhere in the economy. If greater trading volume does not in some way result in the better allocation of capital then we should be pleased to the extent that an FTT reduces trading volume in various markets.

For this reason, a paper published by the CATO Institute last summer showing that a FTT would lead to a sharp decline in the trading of futures should not be seen as negative from the standpoint of proponents of FTTs.[1] Unfortunately, the paper did not accurately measure the decline in trading volume that would result from a tax, leading to an overstatement of the actual decline that would be implied with the tax rate and elasticities assumed in the paper. This mistake wrongly leads the paper to conclude that several major future markets would disappear even with a low tax rate. When a correct calculation is done, it can be shown that this is not true.

The paper’s mistake is a simple one. Elasticities are usually calculated as point elasticities, which relate the change in quantity that would result from a small change in price. For most questions we ask, where we consider price changes that are relatively small (say under 20 percent) using a point elasticity will give us a reasonably good approximation of the change in quantity that would result from the change in price being considered.

However for large changes of the type considered in this paper (all the changes in the price of transactions resulting from the FTT are far more than 100 percent of the current cost of transactions) it is necessary to be more careful in the calculation.

According to reports on Twitter yesterday, the United Nations independent expert on the human rights situation in Haiti, Michel Forst has resigned for “personal reasons,” even though his mandate was supposed to continue for another year. In one of his last acts, Forst’s report for the U.N. Human Rights Council was presented yesterday, recommending to Haiti and the international community that they “throw light” on the cause of the cholera outbreak and “respond to any compensation requests”. The cholera outbreak has killed at least 8,050 and sickened over 650,000 more.

In his report Forst notes that the “question of what caused the outbreak of the epidemic in Haiti remains a burning issue that has attracted significant public controversy.” Over the last few years, a number of scientific reports have identified U.N. troops as the source of cholera’s introduction. Forst’s report, which was issued before the U.N.’s denial of victims’ compensation claims, notes “that silence is the worst response.”

The U.N. broke their “silence” on the issue by rejecting the victims’ claims, yet they have continued to stonewall on the issue of responsibility. While Forst “deplores” the exploitation of the issue by “certain organizations…for political ends,” he recognizes the “need that victims or their families have expressed to know the truth and perhaps even to be given compensation.”

In addition to recommending shedding light on the cause of the outbreak, Forst also calls on the international community and Haitian government to, “Secure international assistance to combat the spread of the cholera epidemic.” The claim against the U.N., in addition to seeking damages, also asks for the U.N. to fund the needed infrastructure to eradicate cholera from Haiti. A 10 year, $2.2 billion eradication plan has been announced, but thus far the funding for it remains in doubt. The plan for the first two years notes that “The total cost for implementation of the Action Plan for 2013–2015 is estimated to be US$443,723,100.” So far, little more than half of that - $238 million - has been secured, most of it from existing funds.

On Sunday, the New York Times editorial board added their voice to those critical of the U.N.’s immunity claim, noting that the U.N.’s “handling of cholera is looking like a fiasco.” The Times adds:

While it insists that it has no legal liability for cholera victims, it must not duck its moral obligations. That means mobilizing doctors and money to save lives now, and making sure the eradication plan gets all the money and support it needs.

Its record so far is dubious. A U.N. appeal last year for $24 million for cholera programs ended the year only 32 percent financed, and in December, the U.N. said it would contribute $23.5 million to the new 10-year plan — about 1 percent of what is needed.

An important new investigative report from the Associated Press’ Alberto Arce describes the apparent ongoing activities of death squads within the Honduran police, reporting that:

In the last three years, the AP has learned, Honduran prosecutors have received as many as 150 formal complaints about death squad-style killings in the capital of Tegucigalpa, and at least 50 more in the economic hub of San Pedro Sula. The country's National Autonomous University, citing police reports, has counted 149 civilians killed by police in the last two years, including 25 members of the 18th street gang.

The AP report also describes a now-infamous and disturbing video (posted here) that appears to show the extrajudicial, cold-blooded murders of two young men in city streets “by masked gunmen with AK-47s who pulled up in a large SUV” – consistent with the police death squad modus operandi as described in the article.

Arce writes that “Even the country's top police chief has been charged with being complicit,” going on to summarize charges against Juan Carlos “El Tigre” Bonilla, now the National Chief of Police, for involvement in extrajudicial killings and disappearances back in 2002. Arce notes that “Last year, Bonilla was chosen to lead the national police force despite unanswered questions about his past. The U.S. Congress decided to withhold State Department funding to the police while they investigated the 2002 internal affairs report.”

A confidential 2003 State Department cable made available by Wikileaks reveals that State Department officials wanted Bonilla (then a fugitive) arrested at the time, and also were concerned with “extra-judicial killings of youth” – in which Bonilla was implicated:

¶12. (C) In his meeting with Minister of Public Security Oscar Alvarez, [Western Hemisphere Affairs Deputy Assistant Secretary Dan] Fisk urged Alvarez to take action against corrupt police, to send a strong signal about impunity by arresting fugitive policeman Juan Carlos "Tiger" Bonilla, and to act carefully against whistle-blowers, such as ex-Chief of Police Internal Affairs Maria Luisa Borjas. He also encouraged Alvarez to address the problem of extra-judicial killings of youth and trafficking in persons.