Category Archive for: Press [Return to Main]

Friday, October 10, 2014

Paul Krugman: Secret Deficit Lovers

Why isn't America celebrating the large fall in the deficit?:

Secret Deficit Lovers, by Paul Krugman, Commentary, NY Times: What if they balanced the budget and nobody knew or cared?
O.K., the federal budget hasn’t actually been balanced. But the Congressional Budget Office has tallied up the totals for fiscal 2014..., and reports that the deficit plunge of the past several years continues. ...
So where are the ticker-tape parades? For that matter, where are the front-page news reports? After all, talk about the evils of deficits and the grave fiscal danger facing America dominated Washington for years. Shouldn’t we be making a big deal of the fact that the alleged crisis is over?
Well, we aren’t, and once you understand why, you also understand what fiscal hysteria was really about.
First, ordinary Americans aren’t celebrating the deficit’s decline because they don’t know about it. That’s not mere speculation...
Why doesn’t the public know better? Probably because of the way much of the news media report this and other issues, with bad news played up and good news downplayed if it’s reported at all.
This has been glaringly obvious in the case of health reform, where every problem ... has been the subject of headlines, while in right-wing media — and to some extent in mainstream news sources — favorable developments go unremarked. As a result, many people — even, in my experience, liberals — have the impression that the rollout of Obamacare has been a disaster, and have no idea that enrollment is above expectations, costs are lower than expected, and the number of Americans without insurance has dropped sharply. Surely something similar has happened on the budget deficit. ...
Deficit scolds actually love big budget deficits, and hate it when those deficits get smaller. Why? Because fears of a fiscal crisis — fears that they feed assiduously — are their best hope of getting what they really want: big cuts in social programs. ...
But isn’t the falling deficit just a short-term blip, with the long-run outlook as dire as ever? Actually, no..., there has ... been a dramatic slowdown in the growth of health spending — and if that continues, the long-run fiscal outlook is much better than anyone thought possible not long ago. ...
So let’s say goodbye to fiscal hysteria. I know that the deficit scolds are having a hard time letting go; they’re still trying to bring back the days when Bowles and Simpson bestrode the Beltway like colossi. But those days aren’t coming back, and we should be glad.

Saturday, September 06, 2014

'The Wall Street Journal Parade of Climate Lies'

Jeff Sachs is unhappy with the editorial page of the WSJ:

The Wall Street Journal Parade of Climate Lies: That Rupert Murdoch governs over a criminal media empire has been made clear enough in the UK courts in recent years. That the Wall Street Journal op-ed pages, the latest victim of Murdoch's lawless greed, are little more than naked propaganda is perhaps less appreciated. The Journal runs one absurd op-ed after another purporting to unmask climate change science, but only succeeds in unmasking the crudeness and ignorance of Murdoch's henchmen. Yesterday's (September 5) op-ed by Matt Ridley is a case in point.
Ridley's "smoking gun" is a paper last week in Science Magazine by two scientists Xianyao Chen and Ka-Kit Tung, which Ridley somehow believes refutes all previous climate science. Ridley quotes a sentence fragment from the press release suggesting that roughly half of the global warming in the last three decades of the past century (1970-2000) was due to global warming and half to a natural Atlantic Ocean cycle. He then states that "the man-made warming of the past 20 years has been so feeble that a shifting current in one ocean was enough to wipe it out altogether," and "That to put the icing on the case of good news, Xianyao Chen and Ka-Kit Tung think the Atlantic Ocean may continue to prevent any warming for the next two decades."
The Wall Street Journal editors don't give a hoot about the nonsense they publish if it serves their cause of fighting measures to limit human-induced climate change. If they had simply gone online to read the actual paper, they would have found that the paper's conclusions are the very opposite of Ridley's. ...

Monday, July 14, 2014

Paul Krugman: Obamacare Fails to Fail

Why don't we hear more about the success of Obamacare?:

Obamacare Fails to Fail, by Paul Krugman, Commentary, NY Times: How many Americans know how health reform is going? For that matter, how many people in the news media are following the positive developments?
I suspect that the answer to the first question is “Not many,” while the answer to the second is “Possibly even fewer”... And if I’m right, it’s a remarkable thing — an immense policy success is improving the lives of millions of Americans, but it’s largely slipping under the radar.
How is that possible? Think relentless negativity without accountability. The Affordable Care Act has faced nonstop attacks from partisans and right-wing media, with mainstream news also tending to harp on the act’s troubles. Many of the attacks have involved predictions of disaster, none of which have come true. But absence of disaster doesn’t make a compelling headline, and the people who falsely predicted doom just keep coming back with dire new warnings. ...
Yes, there are losers from Obamacare. If you’re young, healthy, and affluent enough that you don’t qualify for a subsidy (and don’t get insurance from your employer), your premium probably did rise. And if you’re rich enough to pay the extra taxes that finance those subsidies, you have taken a financial hit. But it’s telling that even reform’s opponents aren’t trying to highlight these stories. Instead, they keep looking for older, sicker, middle-class victims, and keep failing to find them.
Oh,... the overwhelming majority of the newly insured, including 74 percent of Republicans, are satisfied with their coverage.
You might ask why, if health reform is going so well, it continues to poll badly. It’s crucial ... to realize that Obamacare, by design, by and large doesn’t affect Americans who already have good insurance. As a result, many peoples’ views are shaped by the mainly negative coverage in the news... Still, the latest tracking survey from the Kaiser Family Foundation shows that a rising number of Americans are hearing about reform from family and friends, which means that they’re starting to hear from the program’s beneficiaries.
And as I suggested earlier, people in the media — especially elite pundits — may be the last to hear the good news, simply because they’re in a socioeconomic bracket in which people generally have good coverage.
For the less fortunate, however, the Affordable Care Act has already made a big positive difference. The usual suspects will keep crying failure, but the truth is that health reform is — gasp! — working.

Wednesday, June 11, 2014

'What's the Penalty for Pundits Who Get It Wrong?'

Barry Ritholtz:

What's the Penalty for Pundits Who Get It Wrong?: Five years ago, Arthur Laffer ... wrote an op-ed article. It was a grab bag of his pet peeves: opposition to Federal Reserve policies ... and concern about the “unfunded liabilities of federal programs,'' including Social Security and Medicare. And, of course, he decried deficits, which in large part are the result of his thesis that tax cuts often increase revenue. As it turns out, for the most part, they don’t.
The article he penned on June 11, 2009? “Get Ready for Inflation and Higher Interest Rates.”  ...
Pretty much every single warning, every data point, every item Laffer complained about was wrong.
Why does this happen, and why are there no penalties for being so inaccurate? ... This isn't about economics, it's about politics. Unfortunately, the dismal science has become the vehicle of choice for those who seek to further their own political agenda. ...

I would separate those who are honestly wrong from those who take a misleading position (or one they know is wrong) for political purposes. There should be consequences in both cases, those who are honestly wrong again and again should come to be ignored, but those who intend to mislead and deceive should face much higher penalties. As it stands, there's hardly any penalty at all for telling people what they want to hear even if there is no basis for it, or misleading people to accomplish a political agenda.

Friday, May 30, 2014

Piketty, Krugman, and Wren-Lewis Respond to the FT

Piketty's full response from Vox EU (see also Paul Krugman: Thomas Doubting Refuted and Simon Wren-Lewis: What the Financial Times got (very) wrong):

Response to FT, by Thomas Piketty, Vox EU: This is a response to the criticisms - which I interpret as requests for additional information – that were published in the Financial Times on May 23 2014 (see FT article here).1 These criticisms only refer to the series reported in chapter 10 of my book Capital in the 21st century, and not to the other figures and tables presented in the other chapters, so in what follows I will only refer to these series.
This response should be read jointly with the technical appendix to my book, and particularly with the appendix to chapter 10 (available here). The page numbers given below refer to the HUP edition of my book that was published in March 2014.
Let me start by saying that the reason why I put all excel files on line, including all the detailed excel formulas about data constructions and adjustments, is precisely because I want to promote an open and transparent debate about these important and sensitive measurement issues.
Let me also say that I certainly agree that available data sources on wealth inequality are much less systematic than what we have for income inequality. In fact, one of the main reasons why I am in favor of wealth taxation, international cooperation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which everybody could agree with).
For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data; household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top); Forbes-type wealth rankings (which certainly give a more realistic picture of very top wealth groups than wealth surveys, but which also raise significant methodological problems, to say the least). As I make clear in the book, in the on-line appendix, and in the many technical papers on which this book relies, I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on line). In fact, the “World Top Incomes Database” (WTID) is set to become a “World Wealth and Income Database” in the coming years, and together with my colleagues we will put on-line updated estimates covering more countries. But I would be very surprised if any of the substantive conclusions about the long run evolution of wealth distributions was much affected by these improvements.
I welcome all criticisms and I am very happy that this book contributes to stimulate a global debate about these important issues. My problem with the FT criticisms is twofold. First, I did not find the FT criticism particularly constructive. The FT suggests that I made mistakes and errors in my computations, which is simply wrong, as I show below. The corrections proposed by the FT to my series (and with which I disagree) are for the most part relatively minor, and do not affect the long run evolutions and my overall analysis, contrarily to what the FT suggests. Next, the FT corrections that are somewhat more important are based upon methodological choices that are quite debatable (to say the least). In particular, the FT simply chooses to ignore the Saez-Zucman 2014 study, which indicates a higher rise in top wealth shares in the United States during recent decades than what I report in my book (if anything, my book underestimates the rise in wealth inequality). Regarding Britain, the FT seems to put a lot of trust in self-reported wealth survey data that notoriously underestimates wealth inequality.
I will start by giving an overview of the series on wealth inequality that I present in chapter 10 of my book. I will then respond to the specific points raised by the FT.
Overview of the series on wealth inequality reported in chapter 10
The long run series on wealth inequality provided in chapter 10 of my book deal with only four countries: France, Britain, Sweden, and the United States.
Figure 10.1. Wealth inequality in France, 1810-2010 (p.340)
Figure 10.2. Wealth inequality in versus France 1810-2010 (p.341)
Figure 10.3. Wealth inequality in Britain, 1810-2010 (p.344)
Figure 10.4. Wealth inequality in Sweden, 1810-2010 (p.345)
Figure 10.5. Wealth inequality in the United States, 1810-2010 (p.348)
Figure 10.6. Wealth inequality in Europe versus the US, 1810-2010 (p.349)
The series used to construct figures 10.1-10.6, replicated in the book on p.340-348 are available in table S10.1, as well as in the corresponding excel file.
These wealth inequality series deal with much fewer countries and are substantially more exploratory than the empirical material provided in other parts of the book: income and population growth in chapters 1-2; wealth-income ratios in chapters 3-6; income inequality series in chapters 7-9. This follows from the fact that available data sources on wealth inequality are much less systematic than data sources on growth, wealth-income ratios and income inequality. In particular, we do have yearly income declarations statistics for dozens of countries, but we do not have yearly wealth declarations statistics for most countries. So we have to do with the diverse set of sources that I described above.
I believe that the data we have on wealth inequality is sufficient to reach a number of conclusions. Namely, wealth inequality was extremely high and rising in European countries during the 19th century and up until World War 1 (with a top 10% wealth share around 90% of total wealth in 1910), then declined until the 1960s-1970s (down to about 50-60% for the top 10% wealth share); and finally increased moderately since the 1980s-1990s. In the United States, wealth inequality was less extreme than in Europe until World War 1, but it was less strongly affected by the 20th century shocks, and in recent decades it rose more strongly than in Europe. Both in Europe and in the United States, wealth inequality is less extreme than what it was in Europe on the eve on World War 1.
I believe that the data that we have is sufficient to reach these conclusions, but that it is insufficient to go much beyond that. In particular, our ability to measure the most recent trends in wealth inequality is limited, partly due to the huge rise in cross border financial assets and offshore wealth. According to Forbes-type wealth rankings, the very top of the world wealth distribution has been rising about three times faster than average wealth at the global level over the 1987-2013 period (see chapter 12 of my book, in particular Table 12.1. The growth rate of top global wealth, 1987-2013). This seems to be clear evidence than wealth inequality is rising, partly because the rate of return to very large portfolios is higher than the growth rate. This interpretation is consistent with what I find with the returns to large university endowments (see Table 12.2. The return on the capital endowments of US universities, 1980-2010). But we do not really know whether this holds only at the very very top or for bigger groups (say, above 10 millions $ and not only above 1 billion $). Let me make very clear that I do not believe that r>g is the only force that determines the dynamics of wealth inequality. There are many other important forces that could in principle drive wealth inequality in other directions. The main message coming from my book is not that there should always be a deterministic trend toward ever rising inequality (I do not believe in this); the main message is that we need more democratic transparency about wealth dynamics, so that we are able to adjust our institutions and policies to whatever we observe.
I now consider each of the four countries one by one and respond to the specific points raised by the FT. I start with Sweden (the first country for which the FT expresses concerns), and then move to France, the United States, and finally to Britain (arguably the country with the biggest data problems) and to the European average.
Sweden (see figure 10.4 here)
The FT does not point out any significant disagreement regarding Sweden. Their corrected figure looks virtually identical to mine (see their figure on Sweden here).
The FT argues however that my choice of years from raw data sources is not entirely clear. For instance, they point out that raw data for year "1908" for year "1910", year "1935" for year "1930", and so on. These issues are already explained in the book and in the technical appendix, but they probably need to be clarified. Generally speaking, when I present series on wealth-income ratios and wealth inequality (and also for some figures on income inequality), I usually choose to present decennial averages rather than yearly series. This is because wealth series often display a lot of short-run volatility (in particular due to sharp movements in asset prices). So in order to focus the attention on long-run evolutions, it is better to abstract from these short-run movements and show decennial averages. See for instance the wealth-income series presented in chapter 5: contrast figure 5.1 and figure 5.5. When full yearly series are available, the way decennial averages are computed in the book is the following: "1900" usually refers to the average "1900-1909", and so on. This is further explained in the technical paper "Capital is back..." (Piketty-Zucman QJE 2014) available here.
In the case of the wealth inequality series reported in chapter 10, the raw series are usually not available on annual basis, so I compute decennial averages on the basis of the closest years available. This is clearly explained in the chapter 10 excel file (see sheet "TS10.1"). For instance, "1870" is computed as the average for years "1873-1877", "1910" as the average "1907-1908", and so on. These choices can be discussed and improved, but they are reasonably transparent (they are explicitly mentioned in the excel table, which apparently the FT did not notice), and as one can check they have negligible impact on long run evolutions.
The FT also suggests that I made a transcription error by using the estimate for 1908 for the top 1% wealth share (namely, 53.8% of total wealth) for year 1920 (instead of the correct raw estimate for that year, namely 51.5% of total wealth). In fact, this adjustment was intended to correct for the fact that there is a break in a data sources in 1908: pre-1908 series use estate tax data, while post-1908 use wealth tax data, resulting into somewhat lower top wealth (as exemplified by year 1908, for which both data sources co-exist; see Waldenstrom 2009, Table 3.A1, p.120-121). This is standard practice, but I agree that this adjustment should have been made more explicit in the technical appendix and excel file.2 In any case, whatever adjustment one chooses to make to deal with this break in series is again going to have a negligible impact on long-run patterns.
France (see figure 10.1 and figure 10.2)
The FT does not point out any significant disagreement regarding France. Their corrected figure looks virtually identical to mine (see their figure on France here).
The FT argues however that no explanation is given for some of the data construction. Namely, the FT claims the following: “The original source reports data relative to the distribution of wealth among the dead. In order to obtain the distribution of wealth across the living, Prof Piketty augments the share of the top 10 per cent of the dead by 1 per cent and the wealth share of the top 1 per cent by 5 per cent. An adjustment of this sort is standard practice in this type of calculations to correct for the fact that those who die are not representative of the living population. Prof. Piketty does not explain why the adjustment is usually constant. But in one year, 1910, it is not constant and the adjustment scale rises to 2 per cent and 8 per cent respectively. There is no explanation.”
This is a surprising statement, because all necessary explanations are actually given in the technical research paper on which these series are based (see Piketty-Postel-Vinay-Rosenthal AER 2006) and in the chapter 10 excel file (see sheet "TS10.1DetailsFR"). Namely, the PPVR AER 2006 paper includes detailed, year-by-year estimates of how differential mortality affects wealth inequality among the living, and finds that the ratio between top wealth shares among the living and top wealth shares among decedents rises at the end of the 19th century and in the early 20th century. Intuitively, this is because differential mortality effects seem to become stronger around that time (namely, life expectancy rises quite fast among top wealth holders, but much less so for the rest of the population). One can see this explicitly in table A4 of the working paper version of the PPVR AER 2006 article; this is explicitly reproduced in chapter 10 excel file (see sheet "TS10.1DetailsFR", table A4 (2), ratios for top 1% shares). More recent research has also confirmed the changing pattern of differential mortality around that time. See in particular the appendix tables to Piketty-Postel-Vinay-Rosenthal EEH 2014. Differential mortality is a complex issue, and we do not have perfect answers; but we do our best to address this issue in the most transparent way. In particular, we put on line on this web site the large micro files that we have collected in French inheritance archives, so that everybody can reproduce our computations and use this data for their own research. We are currently collecting additional micro files in Parisian and provincial archives, and we will put new data files and updated estimates in the future.
What it find somewhat puzzling in this controversy is the following: (i) the FT journalists evidently did not read carefully the technical research papers and excel files that I have put on-line; (ii) whatever adjustment one makes to correct for differential mortality (and I certainly agree that there are uncertainties left regarding this complex and important issue), it should be clear to everyone that this really has a relatively small impact on the long-run trends in wealth inequality. This looks a little bit like criticism for the sake of criticism.
United States (see figure 10.5)
The FT does point out more substantial disagreements regarding the United States. Their corrected figure actually looks very close to mine regarding the long run evolution, but not for the recent decades, where the FT considers that I overestimate somewhat the rise in wealth inequality (see their figure on United States here). The FT also expresses concerns about some of the adjustments that are made for earlier periods, although they have little impact on the overall patterns.
As I explain in the book (chapter 10, p.347) and in the technical appendix to chapter 10 (available here), there are very large uncertainties regarding US historical sources on wealth inequality, and I certainly agree that the series that are provided in the book can be improved. I try to combine in the most consistent manner the information coming from estate tax statistics (which unfortunately only cover the top few percents of the distribution, and not the entire population like in France) and the information coming from household wealth surveys (fortunately the SCF is known to be of higher quality than most other wealth surveys). In particular, the estimate for year 1970 tries to combine the estimates available for top 10% and top 1% wealth shares for years 1960 and 1980 and the evolution of very top wealth shares between 1960, 1970 and 1980. This has little impact on the overall long-run pattern, but I agree that this is relatively uncertain, and that this could have been explained more clearly.
I should stress however that the more recent and more reliable estimates that were recently produced by Emmanuel Saez (Berkeley) and Gabriel Zucman (LSE) confirm the pattern that I find. See Saez-Zucman 2014. For the recent decades, they actually find a larger rise of top 10% wealth shares and especially top 1% and top 0.1% wealth shares than what I report in my book. So, if anything, my book tends to underestimate the recent rise in US wealth inequality (contrarily to what the FT suggests).
This important work was done after my book was written, so unfortunately I could not use it for my book. Saez and Zucman use much more systematic data than I used in my book, especially for the recent period. Also their series are constructed using a completely different data source and methodology (namely, the capitalization method using capital income flows and income statements by asset class). Now that this work is available, the Saez-Zucman series (which unfortunately the FT article seems to ignore) should be used as reference series for wealth inequality in the United States. In a recent survey chapter that will be published in the Handbook of Income Distribution (HID), we choose to use the Saez-Zucman series (rather than the series reported in my book) in order to describe the long-run evolution of US wealth inequality. See Piketty-Zucman 2014 (see in particular supplementary figure S3.5, p.91 for a comparison between the two series; as one can see, they look very similar).3
Britain (see figure 10.3)
The FT does point out substantial disagreements regarding the recent evolution in Britain. Their corrected figure actually looks very close to mine regarding the long run evolution, but not for the recent decades, where the FT considers that there was no rise at all in wealth inequality, and possibly a decline, whereas I report a rise (see their figure on Britain here). The biggest disagreement comes from the latest data point (c.2010): the FT considers that the right estimate for the top 10% wealth share is around 44% of total wealth (this comes from a recent household survey based upon self-reported data, namely the “wealth and assets survey”, which I believe underestimates top wealth groups significantly; see below); whereas I report an estimate with a top 10% wealth share around 71% (this comes from more reliable estate tax statistics). This is a very large difference indeed.
Let me make clear that although I think my estimate is more reliable and rests on better methodological choices, I also believe that this large gap reflects major uncertainties and limitations in our collective ability to measure recent evolution of wealth inequality in developed countries, particularly in Britain. As I explain above, I believe this is a major challenge for our statistical and democratic institutions.
The estimates that I report for wealth inequality in Britain rely primarily on the very careful estimates that were established by Atkinson-Harrison 1978 and Atkinson et al 1989 using estate tax statistics from the 1920s to the 1980s. I updated these series for the 1990-2010 period using official HMRC data that are also based upon estate tax records. I find a rising inequality trend, although a more modest one than for the United States. I think this is the most reasonable estimate one can obtain given available data, but this certainly should be improved in the future.
What is troubling about the FT methodological choices is that they use the estimates based upon estate tax statistics for the older decades (until the 1980s), and then they shift to the survey based estimates for the more recent period. This is problematic because we know that in every country wealth surveys tend to underestimate top wealth shares as compared to estimates based upon administrative fiscal data. Therefore such a methodological choice is bound to bias the results in the direction of declining inequality. For instance, as I note in the technical appendix to chapter 10 (available here), the recent wealth surveys undertaken by INSEE in 2004-2010 in France indicate a top decile share just above 50% of the total wealth, whereas fiscal data (inheritance and wealth tax) suggest a top decile share above 60% of the total wealth. The gap seems particularly large for the case of Britain, which could reflect the fact that the “wealth and assets survey” seems particularly bad at measuring the top part of the wealth distribution of the UK. Indeed, according to the latest report by the Office of national statistics (ONS), the response rate for this survey was only 64% in 2010-2012; this is an improvement as compared to the response rate of 55% that was observed during the 2006-2008 wave of the same survey (see ONS 2014, Table 7.1); but it is pretty clear that with such a low response rate, it is hard to claim that one can adequately measure wealth inequality, particularly at the top of the distribution. Also note that a 44% wealth share for the top 10% (and a 12.5% wealth share for the top 1%, according to the FT) would mean that Britain is currently one the most egalitarian countries in history in terms of wealth distribution; in particular this would mean that Britain is a lot more equal that Sweden, and in fact a lot more equal than what Sweden as ever been (including in the 1980s). This does not look particularly plausible.
Of course the estate records based estimates also raise significant methodological concerns, and I do not claim that the resulting estimates are perfectly reliable. In particular, they might also underestimate top wealth levels (because top wealth holders sometime escape the estate tax through sophisticated trust funds or offshore assets). But they definitely seem more plausible than the estimates based upon self-reported survey data.
Note also that in recent years more and more scholars and statisticians have started to recognize the limitations of household wealth surveys and to upgrade the top segments of survey based wealth distributions using other sources. For instance, a recent study undertaken at the research department of the ECB attempts to upgrade in a systematic manner the top tail of the wealth surveys undertaken in Eurozone countries by using the Pareto coefficients that one can estimate using Forbes rankings and other lists of very high wealth individuals in each country. The results indicate that this can lead to very large increases (more than 10 percentage points) in top wealth shares (see Vermeulen 2014). In the United States, although the SCF wealth survey is generally regarded as a very high quality wealth survey, there has been some important work trying to upgrade the top tail by using Forbes ranking and estate tax data (see Johnson-Shreiber 2006 and Raub-Johnson-Newcomb 2010). This is definitely something that should be done for the British “wealth and assets survey”.
Regarding the 19th century estimates, the FT expresses concerns with the way I compute the top wealth shares for Britain in 1810 and 1870. Namely, I borrow the top 1% wealth shares estimates from Lindert (54.9% and 61.1%, respectively), and I assume that the next 9% shares shifted from 28% to 26%. Lindert does report a lower estimate for the next 9% share (about 16%). However this would indicate a relatively unusual pattern of Pareto coefficients within the top 10% of the distribution (as compared both to the French 19th century inheritance data, which is a lot more comprehensive than the British probate data, and to the British estate tax statistics for 1911-1913). Given that the probate records used by Lindert seem to provide a better coverage of the top 1% than of the next 9%, I use Pareto interpolation techniques to estimate the next 9% share. This is an issue that should have been explained more clearly and that would definitely deserve further research. This has a limited impact for the long run patterns analyzed here (the pre-World War 1 rise in wealth inequality would be even larger without this adjustment).
European average (see figure 10.6)
Finally, the FT also expresses the following concern: the European average series, which I computed by making a simple arithmetic series between France, Britain and Sweden, should have been computed using population weighted averages. I do agree that population (or GDP) weighted averages are generally superior to simple arithmetic averages. However I should stress that it really does not make much of a difference here, because all three European countries that I use follow fairly similar long run patterns. Namely, all three countries display high and rising top wealth shares during the 19th century and up until World War 1 (with about 90% of total wealth for the top 10% around 1910); then a sharp decline until the 1960s-1970s (with top 10% wealth shares down to 50-60%); and finally a modest rise since the 1980s-1990s. So whether one weights the three countries with equal weights or according to population or GDP does not make a big difference. But in case Britain did follow a markedly different pattern than the other countries in recent decades (with a decline in wealth inequality rather than a rise), then putting more weight on Britain than on Sweden becomes a significant issue. So we are back to the previous question: what happened to wealth inequality in Britain in recent decades? The FT seems to believe it has become more equal; however the way they use self-reported wealth survey data is not convincing. This is nevertheless an interesting debate for the future, and we should all agree that we know too little about it.
1 See also the other two articles published by the FT on May 23 2014: here and there. See also my short reponse published here in the FT. Unfortunately I was given limited time to submit this response, so I could not address specific points; here is a longer response.
2 Also note that the raw series display a decline in top 1% wealth share between 1908 and 1920, but a sharp rise in the share of the next 9% (resulting into a significant increase in the top 10% share). This does not look entirely plausible and might also be due to a break in raw data sources (unless this is due to sharp short-run variations in the relative price of assets held by these different wealth groups).
3 Note that this HID chapter also includes novel series about the evolution of the share of inheritance in total wealth accumulation. These new series use a different methodology and complement those reported in chapter 11 of my book.

Friday, May 16, 2014

The Media, the Market and Truth

Simon Wren-Lewis:

But can Mankiw be rescued from the charge of paternalism? (No, I never expected to write that line either.)

More here.

Friday, February 28, 2014

'The Real Reason Nobody Reads Academics'

Appreciate the mention:

The Real Reason Nobody Reads Academics, by Ezra Klein: New York Times columnist Nicholas Kristof recently ignited a bit of a firestorm with a column asking why academics are irrelevant to public debates. I’d turn the question around: Why aren’t journalists better at taking advantage of academic expertise?
The most efficient arrangement would have academics communicate directly with the public. Thankfully for journalists, they don’t. ... It would be a disaster for our profession if academics became good at communicating what they know.
The relationship between academics and journalists should be a happy symbiosis. The two sides are perfectly designed, in strengths and weaknesses, to support each other. ...
The good news is the chasm is closing. Academics have increasingly turned to the blogosphere, opening a window on academic conversations that were formerly out of view. In political science, for instance, the Monkey Cage is a minor miracle. In economics, Mark Thoma at the Economist’s View is tireless in tracking discussion across the profession.
Still, it would be better if academics didn’t have to blog, or know a blogger, to get their work in front of interested audiences. That would require a new model for disseminating academic work -- one that gets beyond the samizdat system used for working papers on the one hand, and the rigid journal publication system on the other. If academia was easier to keep up with, I think a lot of academics would be surprised to learn how many journalists care about their work, and I think a lot of journalists would be happy to find how much academic research can do for their stories.

Monday, January 27, 2014

'A Tea Party Knight Is Out'

David Warsh wonders if the WSJ is "changing things somewhat in the orientation of its editorial board":

A Tea Party Knight Is Out, by David Warsh: News, goes an old saw, is what happens near an editor. That’s what commenced last September when Wall Street Journal editors got hung up in lane closings at the George Washington Bridge.

Whoever they were, the editors passed along their displeasure and, perhaps, suspicions to the paper’s transportation reporter, Ted Mann. After a month of working the phones, Mann broached the possibility that the tie-up was deliberate, with a story on October 2: Port Chief Fumed Over Bridge Jam/Patrick Foyle Fired Off an Email Message after Learning of Lane Closure..., it was clearly the WSJ that first put Gov. Christie in play. ...

Aggressive WSJ reporting on a frontrunner for the next Republican Party presidential nomination is evidence that Rupert Murdoch hasn’t monkeyed with the longstanding culture of the news pages. ...

I mention it here because ... Murdoch may have an interest in changing things somewhat in the orientation of its editorial board. I refer to the departure of Stephen Moore to the Heritage Foundation.

Moore was the board’s chief economic commentator, a founder of the Club for Growth, enthusiast of Tea Party ideals, possessor of a master’s degree from George Mason University and a disciple of Arthur Laffer and Julian Simon. ...

The WSJ editorial page is a position of enormous influence... Depending on how Moore is replaced, the opportunity exists for Murdoch’s paper to play a constructive role... – perhaps even to modulate the spirit of intransigence that dates back to 1972, when editor Robert Bartley and Jude Wanniski initiated a new era of political economic discourse in US politics.

It was Bartley’s unrelenting attacks on Bill Clinton in the 1990s that established the predicate that presidents who are Democrats not only have bad politics, but are not legitimate. Much of the present-day animosity toward Obama got its start with Bartley’s over-the-top opposition to Clinton. ...

I plan to pay much closer attention to the editorial page of the WSJ in the months to come. Something is going on there.

Monday, October 14, 2013

Republicans are Delusional about US Spending and Deficits

Dean Baker is not happy with how budget issues are being presented to the public:

Republicans are delusional about US spending and deficits: It is understandable that the public is disgusted with Washington; they have every right to be. At a time when the country continues to suffer from the worst patch of unemployment since the Great Depression, the government is shut down over concerns about the budget deficit.
There is no doubt that the Republicans deserve the blame for the shutdown and the risk of debt default. They decided that it was worth shutting down the government and risking default in order stop Obamacare. That is what they said as loudly and as clearly...
Going to the wall for something that is incredibly important is a reasonable tactic. However, the public apparently did not agree with the Republicans. Polls show that they overwhelmingly oppose their tactic of shutting down the government and risking default over Obamacare. As a result, the Republicans are now claiming that the dispute is actually over spending.
Anywhere outside of Washington DC and totalitarian states, you don't get to rewrite history. However, given the national media's concept of impartiality, they now feel an obligation to accept that the Republicans' claim that this is a dispute over spending levels.
But that is only the beginning of the reason that people should detest budget reporters. The more important reason is that they have spread incredible nonsense about the deficit and spending problems facing the country, causing most of the public to be completely confused on these issues. ...
Yes, the public has every right to be disgusted.

Sunday, October 06, 2013

Hal Varian: The Economics of the Newspaper Business

This one is from Brad DeLong's "noted" list:

Hal Varian: the economics of the newspaper business: Thank you... I am an economist by training, and only a part-time journalist, so I want to focus my remarks on the economics of the newspaper business during this period of transition.
1. Printed  newspaper circulation has been declining for 50 years...
2.  The internet is a superior way to distribute and read news...
3.  The basic economic problem facing news is increased competition for attention...
4.  Newspapers never made money from news...
5.  Offline news reading is a leisure time activity, online news reading is a labor time activity...
6.  Ad revenue depends on reader engagement...
7.  Tablets give newspapers a way to reclaim some lost audience...
8. The fundamental challenge facing newspapers is to increase the time people spend on their content...

(He explains each point in the longer version.)

Wednesday, July 31, 2013

'A False Equivalence Classic'

News organizations should listen to James Fallows. It's soooo frustrating to see reporting like this:

A False Equivalence Classic, by James Fallows: A reader sent in the paragraph below as another classic in the false-equivalence chronicles. It comes from a bigtime news organization... I'm intentionally leaving out the details, because what makes the story significant is not that it's exceptional but that it's representative.

The article is about the risk that the economy will be disrupted yet again, by yet another showdown over raising the federal debt ceiling...:

With investors already nervous about the Federal Reserve's plan to start scaling back its stimulus program, another fiscal policy standoff could be more disruptive this time around.
In recent days, both Democrats and Republicans have been digging in their heels, setting up another possible nerve-wracking battle over the debt ceiling, which the Treasury expects to hit by November.
"Hearing Washington banter back and forth over this again was like a recurring bad dream," said [I'll leave out this guy's name too]...

That's one way to describe what's going on: Another damned partisan flap! Can't these politicians grow up and stop squabbling? ... This is of course the tone that runs through most gridlock/ dysfunction stories...

If you describe the "disagreement" [this] ... way, no one's really to blame. It's just politics, a sign of the symmetrical dysfunction that plagues us all.

If you describe it [a] second way, then one side is sticking to historic norms and practices -- and the other is deliberately bringing on a showdown, with the all consequent risks for the domestic and international economies, via demands and threats out of scale with what previous Congresses have done. This second version is what's happening. ...

What's going on now is ... like the 1970s-era hijackers Brendan Koerner describes in his recent book, who would threaten to blow up the plane unless they got the ride to Cuba they wanted. Or, if you want a less violent analogy, it's like me walking into a restaurant, ordering and enjoying a meal, and then when I finished just tearing up the check and saying that I was "digging in my heels" about whether I should pay. ...

Decent reporting on these issues that places the blame where it belongs would help immensely, but I probably shouldn't hold my breath waiting for this to change.

Thursday, July 04, 2013

'The Knowledge Transmission Mechanism'

Ha, visiting Belize during the rainy season may not have been the best idea I ever had. It's pouring rain, thunder, lightening, all tours are canceled, internet, phone, and TV are out (at least we have electricity now), and the roads (mostly dirt/gravel) are horrid. So instead of taking my mind off of things, nothing to do but sit in my room and think.

So I called a cab, went to the BTL (phone) store, got a sim chip, many gigs of data, and finally connected to the outside world once again.

This is supposed to continue for several more days and I want to preserve my data -- so, quickly, from Simon Wren-Lewis:

The Knowledge Transmission Mechanism: In a comment on my last post, Joseph Grossman asks “If the vast majority grasp and support the basic shape of the [fiscal] stimulus solution, and if we live in democracies, isn't it time to shift the analysis to expose the exact and precise mechanisms by which our electoral systems are failing miserably?” This is the question which, since 2010, I have asked myself almost every day. The question becomes even more relevant as the intellectual case for austerity crumbles, but the policy continues, and in some cases even appears to gain ground. ... I want to use this example to look at the question of the transmission of economic ideas more generally. So let’s break the question down.
First, do the vast majority of economists agree? In the case of fiscal policy, I think the honest answer here is: majority, probably yes, vast, almost certainly no. ...
However, what the majority - vast or not - of economists think would be irrelevant if no one listened to them. The transmission mechanism from economists to economic policy works along many channels. It may be direct. It may be mediated through the civil service. It may work through economists influencing popular opinion, which then influences policymakers. I think the last of these is the least important. ...

After a discussion of some of the problems in the transmission of ideas to policymakers, he Simon Wren-Lewis concludes:

My own current view is that these structural weaknesses are to a large extent inherent in liberal democratic societies, where restrictions on what money can do are very limited. That has led me to be much more favourably disposed to the delegation of economic decisions, even though this appears less democratic, and can be seen as representing arrogance and self-interest by the academic community. Yet the problem is real enough. And it is personal: when you study, teach and research in a subject where some of its most basic findings - understood for more than half a century- can be brushed aside so easily, and millions of people are worse off as a result, you have to ask yourself what the point is.

Friday, March 15, 2013

Journal News (BE Journal of Theoretical Economics)

Resignations at the BE Journal of Theoretical Economics

Thursday, March 14, 2013

Inflation is *Not* What We Should Be Worried About

Dave Henderson responds to an article called "If There's No Inflation, Why are Prices Up So Much?":

...the main thing he does in the ... article is look selectively at relative prices that have increased a lot...

I had started a response to the same article a couple of days ago, and then decided to let it go. But I may as well resurrect it. As noted, the article looks selectively at a few prices that have gone up a lot, and then asks "why haven’t these more rapid increases shown up in the Consumer Price Index?" They have, but they are offset by falling prices elsewhere. This is easy to see in the underlying data.

This is the PCE rather than the CPI, but the story is the same (this is what the Fed monitors, and it's a better measure to look at anyway -- I used month-to-month data because it seems like the article used a similar measure -- year over year is less volatile, but again the story is basically the same). Shown below is a list of the inflation rates for the individual components that make up the PCE (the changes are from December to January, the latest data available). Notice how many prices of the goods and services consumed by a typical household fell on a month-to-month basis. You rarely hear people talking about how well they made out due to falling prices, but you hear a lot --- see the article -- about prices that are going up (the overall month-to-month figure, where prices are weighted by their share of a typical consumption basket, was 0.2 percent, i.e. less than one percent -- that means price increases and price decreases nearly canceled each other out).

Despite scare stories in the media about all the hidden inflation, it's just not there. Thus, there's no reason for the Fed to start raising interest rates to combat this phantom threat. If inflation (or the threat of inflation) does kick-up, we'll have to balance the costs of higher than expected inflation with the costs of fighting it and prolonging the recovery of output and employment -- even then, relative to a moderate outbreak of inflation I think unemployment is the more important problem to address -- but presently it's not a close call at all. Alleviating unemployment and all the struggles that come with it ought to be our top priority.

[Note: The entries marked in yellow are the trim points for the Dallas Fed's trimmed mean estimate of the inflation rate (which is similar to excluding food and energy). Inflation was 1.3 percent from December to January according to the trimmed-mean measure (excluding food and energy gives an estimate of 1.8 percent). People usually complain that trimming volatile prices from the inflation measure hides inflation that hits households, e.g. it hides increases in the price of gas. But in this case excluding volatile prices such as food and energy increases the measured inflation rate from .2 percent to either 1.3 percent or 1.8 percent depending on which prices are excluded. The very first entry in the table helps to explain why.]

Component Annualized 1-month % change
PCE: Gasoline & Other Motor Fuel Price Index   -32.7
Personal Consumption Expenditures: Clothing Materials Price Index   -30.9
Personal Consumption Expenditures: Sewing Items Price Index   -30.9
Personal Consumption Expenditures: Commercial Banks Price Index   -26.1
Sales Receipts: Foundatns/Grant Making/Giving Svcs to HH Price Idx  -25.8
Personal Consumption Expenditures: Eggs  Price Index   -21.0
Personal Consumption Expenditures: Photographic Equip Price Index   -20.4
Personal Consumption Expenditures: Natural Gas  Price Index   -18.7
Personal Consumption Expenditures: Fresh Fruit  Price Index   -18.6
PCE: Film & Photographic Supplies Price Index   -15.7
PCE: Othr Depository Instns & Regulated Invest Companies Price Idx  -12.8
PCE: Sporting Equip, Supplies, Guns & Ammunition Price Index   -12.0
PCE: Employment Agcy Services Price Index   -10.3
PCE: Computer Software & Acc Price Index   -10.0
PCE: Net Health Insurance Price Index   -9.5
Personal Consumption Expenditures: Tires Price Index   -9.2
PCE: Personal Computers & Peripheral Equip Price Index   -8.2
Personal Consumption Expenditures: Other Meats  Price Index   -8.1
Personal Consumption Expenditures: Furniture Price Index   -7.5
PCE: Household Cleaning Products Price Index   -7.3
Personal Consumption Expenditures: Fats and Oils Price Index   -7.2
PCE: Coffee, Tea & Other Beverage Mtls Price Index   -7.1
PCE: Children's & Infants' Clothing Price Index   -7.0
Personal Consumption Expenditures: Nursing Homes  Price Index   -6.8
PCE: Mineral Waters, Soft Drinks & Vegetable Juices Price Index   -6.7
PCE: Moving, Storage & Freight Services Price Index   -6.5
PCE: Hair/Dental/Shave/Misc Pers Care Prods ex Elec Prod Price Idx  -6.0
PCE: Elec Appliances for Personal Care Price Index   -6.0
PCE: Motor Vehicle Leasing Price Index   -6.0
Personal Consumption Expenditures: Cereals Price Index   -5.9
PCE: Flowers, Seeds & Potted Plants Price Index   -5.8
Personal Consumption Expenditures: Fresh Milk  Price Index   -5.4
PCE: Food Products, Not Elsewhere Classified Price Index   -5.2
Personal Consumption Expenditures: Window Coverings  Price Index   -5.1
Personal Consumption Expenditures: Wine Price Index   -5.0
Personal Consumption Expenditures: Lubricants & Fluids Price Index  -4.7
Personal Consumption Expenditures: Air Transportation Price Index   -4.6
PCE: Nonprescription Drugs Price Index   -4.0
Personal Consumption Expenditures: Social Assistance Price Index   -4.0
PCE: Stationery & Misc Printed Mtls Price Index   -3.9
Personal Consumption Expenditures: Televisions Price Index   -3.1
PCE: Maintenance & Repair of Rec Vehicles & Sports Eqpt Price Idx  -2.6
PCE: Processed Dairy Products Price Index   -2.5
PCE: Cosmetic/Perfumes/Bath/Nail Preparatns & Implements Price Idx  -2.3
Personal Consumption Expenditures: Fuel Oil  Price Index   -2.0
Personal Consumption Expenditures: Beef and Veal  Price Index   -2.0
PCE: Tax Preparation & Other Related Services Price Index   -1.8
PCE: Misc Household Products Price Index   -1.7
Personal Consumption Expenditures: Other Video Equip Price Index   -1.6
Personal Consumption Expenditures: Physician Services Price Index   -1.0
PCE: Veterinary & Other Services for Pets Price Index   -1.0
PCE: Household Paper Products Price Index   -0.7
PCE: Tools, Hardware & Supplies Price Index   -0.6
Personal Consumption Expenditures: Jewelry  Price Index   -0.6
PCE: Major Household Appliances Price Index   -0.2
Personal Consumption Expenditures: Accessories & Parts Price Index  0.0
Personal Consumption Expenditures: Prescription Drugs Price Index   0.1
PCE: Other Medical Products Price Index   0.3
PCE: Therapeutic Medical Equip Price Index   0.3
Personal Consumption Expenditures: Casino Gambling Price Index   0.3
Personal Consumption Expenditures: Lotteries  Price Index   0.3
PCE: Pari-Mutuel Net Receipts Price Index   0.3
Personal Consumption Expenditures: Legal Services Price Index   0.6
Personal Consumption Expenditures: Prof Assn Dues Price Index   0.6
PCE: Net Motor Vehicle & Other Transportation Insur Price Index   0.6
Personal Consumption Expenditures: New Light Trucks Price Index   0.9
PCE: Motion Picture Theaters Price Index   0.9
Personal Consumption Expenditures: Used Autos Price Index   0.9
Personal Consumption Expenditures: Museums & Libraries Price Index  0.9
PCE: Live Entertainment, ex Sports Price Index   0.9
PCE: Nonprofit Hospitals' Services to Households Price Index   1.0
PCE: Proprietary Hospitals Price Index   1.0
Personal Consumption Expenditures: Spirits  Price Index   1.0
Personal Consumption Expenditures: Govt Hospitals Price Index   1.0
Personal Consumption Expenditures: Taxicabs  Price Index   1.0
PCE: Intercity Mass Transit Price Index   1.0
PCE: Financial Service Charges, Fees & Commissions Price Index   1.1
Personal Consumption Expenditures: Used Light Trucks Price Index   1.3
PCE: Paramedical Services Price Index   1.4
Personal Consumption Expenditures: Motorcycles  Price Index   1.4
PCE: Other Purchased Meals Price Index   1.5
PCE: Video Cassettes & Discs, Blank & Prerecorded Price Index   1.5
Personal Consumption Expenditures: Beer  Price Index   1.5
Personal Consumption Expenditures: Pleasure Aircraft Price Index   1.6
Personal Consumption Expenditures: Pleasure Boats Price Index   1.6
PCE: Other Recreational Vehicles Price Index   1.6
Personal Consumption Expenditures: Bicycles & Acc Price Index   1.6
PCE: Pets & Related Products Price Index   1.8
Personal Consumption Expenditures: Watches Price Index   2.0
Final Consumptn Exps of Nonprofit Instns Serving HH Price Idx  2.0
PCE: Alcohol in Purchased Meals Price Index   2.1
PCE: Amusement Parks, Campgrounds & Related Recral Svcs Price Idx   2.1
PCE: Garbage & Trash Collection Price Index   2.1
Personal Consumption Expenditures: Package Tours  Price Index   2.1
PCE: Owner-Occupied Mobile Homes Price Index   2.2
PCE: Rental Value of Farm Dwellings Price Index   2.2
PCE: Owner-Occupied Stationary Homes Price Index   2.2
Personal Consumption Expenditures: Recreational Books Price Index   2.2
Personal Consumption Expenditures: Spectator Sports  Price Index   2.3
PCE: Other Household Services Price Index   2.3
PCE: Standard Clothing Issued to Military Personnel Price Index   2.6
PCE: Tenant-Occupied Stationary Homes Price Index   2.7
PCE: Tenant-Occupied Mobile Homes Price Index   2.7
Personal Consumption Expenditures: Group Housing   Price Index   2.7
PCE: Other Personal Business Services Price Index   2.8
PCE: Hairdressing Salons & Personal Grooming Estab Price Idx  3.0
PCE: Membership Clubs & Participant Sports Centers Price Index   3.1
PCE: Luggage & Similar Personal Items Price Index   3.2
Personal Consumption Expenditures: Communication Price Index   3.5
PCE: Shoes & Other Footwear Price Index   3.5
Personal Consumption Expenditures: Domestic Services Price Index   3.7
PCE: Food Supplied to Military Price Index   3.7
PCE: Elementary & Secondary School Lunches Price Index   3.7
PCE: Food Supplied to Civilians Price Index   3.7
PCE: Higher Education School Lunches Price Index   3.7
PCE: Elementary & Secondary Schools Price Index   3.8
PCE: Outdoor Equip & Supplies Price Index   4.0
Personal Consumption Expenditures: Fish and Seafood  Price Index   4.1
PCE: Motor Vehicle Maintenance & Repair Price Index   4.3
Personal Consumption Expenditures: New Domestic Autos Price Index   4.3
Personal Consumption Expenditures: New Foreign Autos Price Index   4.3
PCE: Parking Fees & Tolls Price Index   4.3
PCE: Net Household Insurance Price Index   4.5
Personal Consumption Expenditures: Pork Price Index   4.7
Personal Consumption Expenditures: Child Care  Price Index   4.8
PCE: Day Care & Nursery Schools Price Index   4.8
PCE: Corrective Eyeglasses & Contact Lenses Price Index   4.9
PCE: Water Supply & Sewage Maintenance Price Index   5.2
Personal Consumption Expenditures: Housing at Schools Price Index   5.3
Personal Consumption Expenditures: Dental Services  Price Index   5.3
PCE: Audio-Video, Photographic & Info Processing Svcs Price Index   5.5
Personal Consumption Expenditures: Life Insurance  Price Index   5.7
PCE: Water Transportation Price Index   5.7
PCE: Prerec/Blank Audio Disc/Tape/Digital Files/Download Price Idx  6.1
Personal Consumption Expenditures: Bakery Products  Price Index   6.4
PCE: Telephone & Facsimile Equip Price Index   6.5
PCE: Calculators/Typewriters/Othr Info Processing Eqpt Price Idx  6.5
Personal Consumption Expenditures: Musical Instruments Price Index  6.5
Personal Consumption Expenditures: Tobacco  Price Index   6.7
PCE: Funeral & Burial Services Price Index   7.0
PCE: Processed Fruits & Vegetables Price Index   7.0
PCE: Social Advocacy & Civic & Social Organizations Price Index   7.9
PCE: Religious Organizations' Services to Households Price Index   8.2
PCE: Laundry & Dry Cleaning Services Price Index   8.2
PCE: Tenant Landlord Durables Price Index   8.3
Personal Consumption Expenditures: Sugar and Sweets  Price Index   8.5
Personal Consumption Expenditures: Educational Books Price Index   8.7
Personal Consumption Expenditures: Poultry Price Index   9.1
PCE: Carpets & Other Floor Coverings Price Index   9.3
PCE: Proprietary & Public Higher Education Price Index   9.8
PCE: Nonprofit Pvt Higher Education Svcs to Households Price Index  9.8
PCE: Nonelectric Cookware & Tableware Price Index   10.3
PCE: Labor Organization Dues Price Index   11.2
Personal Consumption Expenditures: Other Fuels Price Index   11.4
PCE: Railway Transportation Price Index   11.5
PCE: Clock/Lamp/Lighting Fixture/Othr HH Decorative Item Price Idx  11.7
PCE: Men's & Boys' Clothing Price Index   12.2
Personal Consumption Expenditures: Household Linens  Price Index   13.0
PCE: Repair of Household Appliances Price Index   13.8
PCE: Repair of Furn, Furnishings & Floor Coverings Price Index   13.8
Personal Consumption Expenditures: Electricity   Price Index   14.0
PCE: Commercial & Vocational Schools Price Index   15.1
Personal Consumption Expenditures: Audio Equipment Price Index   16.8
PCE: Women's & Girls' Clothing Price Index   17.4
Personal Consumption Expenditures: Intercity Buses Price Index   18.0
PCE: Other Road Transportation Service Price Index   18.0
Personal Consumption Expenditures: Hotels and Motels Price Index   18.0
PCE: Clothing Repair, Rental & Alterations Price Index   18.4
PCE: Repair & Hire of Footwear Price Index   18.4
PCE: Misc Personal Care Services Price Index   18.4
Personal Consumption Expenditures: Pension Funds Price Index   20.5
PCE: Small Elec Household Appliances Price Index   21.6
PCE: Games, Toys & Hobbies Price Index   21.8
Personal Consumption Expenditures: Fresh Vegetables Price Index   32.2
PCE: Newspapers & Periodicals Price Index   37.6
Personal Consumption Expenditures: Dishes and Flatware Price Index  66.2
PCE: Motor Vehicle Rental Price Index   78.6
PCE: Food Produced & Consumed on Farms Price Index   124.4

Tuesday, March 12, 2013

'When Will Glenn Kessler Question the Counterfactuals of the Deficit Hawks?'

Budget hawks and those playing the role of budget hawk in order to make ideological gains tells us that if we don't cut the budget now, something terrible will happen in the future. Dean Baker wonders why fact-checkers don't address this claim:

When Will Glenn Kessler Question the Counterfactuals of the Deficit Hawks?, by Dean Baker: Glenn Kessler has been doing a good job scrutinizing the claims of horrors of sequester in his job as the Washington Post fact checker. ... These are reasonable points to raise. They imply that steps can be taken to prevent the sequester from being as harmful as simple across the board cuts may first appear.
In fact this is a reasonable way to assess any claim about budgets. Unfortunately this critical approach does not get applied to standard framework in which Washington budget debates are taking place.
This framework holds that we must commit the country to now to achieving some debt target (e.g. 73 percent of GDP) as of 2023, with the country then on a stable path of a debt to GDP ratio, or something really bad will happen. The implicit counter-factual in this framework is that even as the budget situation deteriorates later in this decade and early in the next decade, and financial markets get ever more antsy demanding ever higher interest rates, Congress does nothing.
This has never happened in U.S. history. There has never been a prolonged stretch in which the budget situation has deteriorated with a response from Congress. Nor have the financial markets ever panicked to the point where the government had any difficulty selling its debt.
In other words, the horror stories of exploding deficits and debt and resulting financial market panic have no historical precedent. They assume that future congresses will be far more irresponsible that any we have seen in the past.
This is of course possible, but it is a very strong assumption. It certainly would be worth pointing out to readers. ... This confusion is far more important to current policy debates than the exact number of vaccines that will not be given due to the sequester.

The point is, we don't have to engage in immediate, harmful austerity that will slow the recovery, make it harder for people to find jobs when millions are still unemployed, and so on. We have time to wait until the economy is on better footing (and some of the temporary effects of the recession that are being used to bang the drum for deficit reduction go away) before taking steps to address the long-run budget imbalance. The "now or never" argument is convenient for the hawks and ideologues, but there is little reason to think this is the case.

Friday, March 01, 2013

Economics Professor Mark Thoma Makes Me Wonder about the Other Nuts that are Teaching our Kids...

I was on the radio with conservative radio host Lars Larson earlier this week. Here's a link to the interview:

Economics Professor Mark Thoma makes me wonder about the other nuts that are teaching our kids...

(I haven't listened to it, and won't...)

Thursday, February 21, 2013

'It's an Affinity Thing'

The other day I asked why anyone listens to Bowles/Simpson. After all:

Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more. He is also a reliably terrible forecaster, having predicted an imminent fiscal crisis — within two years — um, two years ago.

In addition, he is:

cantankerous, potty-mouthed individual, who evidently feels not a bit of empathy for those less fortunate.

He's also partisan, and has a clear agenda. Yet "he’s lionized" by the media. Paul Krugman tries to explain the attraction, and what it says about those who hold him in such high regard.

Saturday, February 16, 2013

'Has the Mainstream Media Finally Had Enough?'

Kevin Drum has a question:

Has the Mainstream Media Finally Had Enough?, by Kevin Drum: I'm curious. It seems to me that something has happened over the past three months: the nonpartisan media has finally started to internalize the idea that the modern Republican Party has gone off the rails. Their leaders can't control their backbenchers. They throw pointless temper tantrums about everything President Obama proposes. They have no serious ideas of their own aside from wanting to keep taxes low on the rich. They're serially obsessed with a few hobby horses — Fast & Furious! Obamacare! Benghazi! — that no one else cares about. Their fundraising is controlled by scam artists. They're rudderless and consumed with infighting. They're demographically doomed. ...

The framing of even straight new reports feels just a little bit jaded, as if veteran reporters just can't bring themselves to pretend one more time that climate change is a hoax, Benghazi is a scandal, and federal spending is spiraling out of control. It's getting harder and harder to pretend that the same old shrieking over the same old issues is really newsworthy.

Question: Am I just imagining this? Or has there really been a small but noticeable shift in the tone of recent reporting?

Paul Krugman says:

On both sides of the Atlantic, the austerians seem to be freaking out. And that has to be good news, an indication that they realize, at some level, that they’re losing the debate. ... Unfortunately, these people have already done immense damage, and still retain the power to do a lot more.

The last sentence is my answer to Kevin Drum's question. Even if there is a lull, I expect it to be temporary and I wonder if they've learned anything along the way.

Tuesday, January 15, 2013

'Egregious in its Misuse of Data'

Jeff Sachs is unhappy with the WSJ's editorial page (and not for the first time):

Wall Street Journal: Get a Fact Checker, by Jeffrey Sachs: ...I ... want to talk about fact checking. The [Wall Street] Journal editorial board is egregious in its misuse of data. It writes what it wants without fact checking. Where is the journalistic profession to call them out?
There are two editorial pieces this weekend of note. The story on "Europe's Bankrupt Welfare State" asserts that, "the European way of welfare is bankrupt." This is easy to check. Look at European countries with large welfare states, and see how they are doing in terms of debt, deficits, unemployment, and other indicators of "bankruptcy." I do this in Table 1 here comparing the US with Europe's five leading welfare states: the Netherlands, Denmark, Norway, Sweden, and Germany. ...
Looking at Table 1..., the conclusion is simple. The European welfare states tax and spend more than the US as a percent of GDP, yet also have lower budget deficits as a share of GDP, lower debt-GDP ratios, and lower unemployment rates. Note that the government sectors of Norway and Sweden have net assets rather than net debt. Some bankruptcy!
The second comment is by editorial board member Holman Jenkins, Jr. Mr. Jenkins tries to debunk global warming by writing that "the warmest year on record globally is still 1998 and no trend has been apparent globally since then."
His claim is both false and irrelevant. It is false because most data point to more recent years as being warmer than 1998. ... The claim is also irrelevant, since 1998 was an exceptionally strong El Nino (essentially, a tilt of Pacific warm water towards the west coast of Latin America). ... Comparing subsequent years to a very strong El Nino year mixes up trends and inter-annual variability. ...
The Wall Street Journal editors have failed to notice that even the climate skeptics have come around. ...
The Wall Street Journal editorial board needs a fact checker plain and simple. It's a major paper, with excellent news coverage, and should not destroy its integrity by an editorial board that flouts the basic process of checking the facts.

Wednesday, November 21, 2012

'What the Audience Wants'

Paul Krugman:

C Is For Class Warfare, by Paul Krugman: Ryan Chittum has a great piece about CNBC’s decision to drop even the pretense of journalistic objectivity and throw its weight behind the deficit scolds. Basically, the network has gone all in on behalf of the 0.01 percent.
One question Chittum doesn’t really get at, however, is why CNBC takes this tilt — why, in fact, it has been so dominated by the fake deficit hawk faction, the people who say that the debt is terrible, terrible, and that’s why we have to cut taxes on the rich. After all, the network’s audience does not consists mainly of the very rich; rather, it’s the 1 percent wannabees, who imagine that watching many hours of talking heads will somehow let them absorb the secrets of getting rich. ...
I ... think ... the main story ... is ... this is what the audience wants. And it’s what they want even though the Austerian stuff the network peddles has been wrong, wrong, wrong, wrong... Never mind that the Keynesians have been right about interest rates, inflation, austerity, and more; the audience wants to hear about the debt crisis and hyperinflation coming any day now unless we cut taxes on the rich, or something. ...

Only thing I'd say is that those preferences -- what viewers want to hear -- are unlikely to be independent of what they've heard from the media.

Tuesday, October 30, 2012

'Romney Expands False Jeep-to-China Ad Campaign'

Contra Romney's claims:

Marchionne Weighs In on Jeep Flap, Washington Wire: Fiat/Chrysler Group Chief Executive Sergio Marchionne told company employees in an email that production of Jeep sport utility vehicles will not be moved from the U.S. to China, in his first formal response to a controversy ignited last week when Republican presidential candidate Mitt Romney told a rally in Ohio that Chrysler was contemplating such a move. ...

The Romney campaign has been told this is false. The response:

Romney expands false Jeep-to-China ad campaign, by Greg Sargent: Mitt Romney’s new television ad suggesting that the auto bailout will result in American jeep jobs getting shipped to China has been widely pilloried by news organizations, both nationally and in Ohio. The Romney campaign’s response: It is expanding the ad campaign.
A Dem source familiar with ad buy info tells me that the Romney campaign has now put a version of the spot on the radio in Toledo, Ohio — the site of a Jeep plant. The buy is roughly $100,000, the source says.
The move seems to confirm that the Romney campaign is making the Jeep-to-China falsehood central to its final push to turn things around in the state. The Romney campaign has explicitly said in the past that it will not let fact checking constrain its messaging, so perhaps it’s not surprising that it appears to be expanding an ad campaign based on a claim that has been widely pilloried by fact checkers. ...

As Steve Benen put it, this episode demonstrates more clearly than any other yet that Romney “believes we’ve entered a post-truth era and the disincentive has disappeared — he can repeat falsehoods with impunity without fear of consequences.”

This falsehood is particularly pernicious — it plays on people’s fears for their livelihoods. As I noted earlier today, the president of a United Auto Workers local that oversees workers at the Jeep plant says that after Romney first claimed Jeep was moving production to China, the union received a bunch of calls from workers worried about their jobs.

Ultimately, this may be Romney’s only recourse. ...

The mainstream media is getting dissed big time by the Romney campaign. Romney and company do not appear to have any fear that the media will be able to counter their false assertions (and this is far from the only example). I worry that the media is not up to the task, but nevertheless I hope this one bites back.

Monday, October 08, 2012

One and Done

I don't have much to say, just sitting here wondering why I let the election coverage, particularly on TV, drive me so crazy. One thing that really bothers me is to watch a guest lie outright -- these are cases where the facts are not in doubt -- and then see the guest invited back again and again just because he or she is entertaining and attracts viewers. The rule should be lie once, and you are done (if we don't book the entertaining liars, someone else will!). And "I didn't know" -- the convenient ignorance of the facts that allows false statements -- is no excuse. They are coming on the shows as experts and ought to know when the facts are in obvious disagreement with their claims.

And the eruption on Friday over the employment numbers, and the reporting that actually allowed there to be some doubt about whether manipulation of the report could occur, should have been embarrassing:

Enabling the jobs report conspiracy theory, by Brendan Nyhan: Media ethics pop quiz: When conspiracy theories started circulating on Twitter claiming that Friday’s jobs report had been politically manipulated, what should reporters have done?
(a) Avoid covering a baseless and unsubstantiated charge and focus instead on the mainstream debate over the meaning and significance of the jobs report.
(b) Carefully cover the conspiracy theory as news, making clear that no credible evidence exists to support the claim.
(c) Write up “he said,” “she said” news reports that treat the conspiracy theory as a matter of partisan dispute.
One can make a reasonable case for either (a) or (b), but several outlets chose (c) instead, writing up the charges in a format that is likely to help spread the myth and encourage more like it in the future. With incentives like these, should we be surprised that politicians and commentators keep making false claims? ...
The most significant damage was done ... when the meme jumped to mainstream news coverage and was treated credulously by reporters and commentators, who often framed it as a plausible contention that was in dispute between the parties. In particular, the lede to an appalling story by Abby Ellin appeared to give credence to Welch’s claim. Ellin stated that the surprisingly large decrease in unemployment “has raised suspicions that the White House might be cooking the books ahead of the election” and then spent five additional paragraphs detailing the charges before bothering to start refuting the claim in the seventh paragraph...
Another story described the report as an “October surprise” —a term that usually connotes pre-election dirty tricks—and failed to directly refute claims it briefly described as “conspiracy theories,” while a Reuters report framed the dispute as a “he said,” “she said” dispute between Welch and his critics, even giving him the last word. ...
Reporters shouldn’t be expected to avoid covering controversial claims in the news, but they can exercise judgment in the way they report on those claims. In doing so, the media can weaken the incentives for political elites to promote misinformation...

I don't have any grand points to make about this, no novel solutions to suggest, just frustration. I suppose I should take into account whether the generated controversy over the employment numbers actually helped the right, and I'm not sure it did. It gave the true believers -- the truthers of one form or another -- some red meat to chew on, but for reasonable, undecided voters it may have simply looked like one more example of the right becoming unhinged. After doing so much to overcome the perception of extremism by moving to the middle during the debate, the Romney camp may not have been very happy with that development.

But whether it helped, hurt, or didn't much matter, the news agencies still ought to be embarrassed that a claim with no evidence whatsoever backing it up -- just something some clown said on Twitter -- could end up being treated and reported on as if it is a question with some merit.

Friday, September 21, 2012

'Primetime Fox News And WSJ Editorial Climate Coverage Mostly Wrong'

Climate scientists document News Corporation's distortions on climate change:

Brenda Ekwurzel is a climate scientist with the Union of Concerned Scientists. She announced in New York City on September 21st the results of an analysis of climate change coverage at two major properties of the News Corporation, the Fox News Channel and the Wall Street Journal.
“What we found in our analysis was that a staggering 93 percent of all occurrences in the last six months in the prime time news of Fox News were misleading occurrences of climate science. Okay, for the Wall Street Journal opinion section in the last year, we found a surprising 81 percent of the occurrences were misleading. And of the accurate ones, these were all letters to the editor that were submitted in response to misrepresentations in editorials or other letters. So, a broad swath of News Corporation viewers and readership are being misled about the science.”

Tuesday, September 11, 2012

'Is Medicare Really Going Bankrupt? Definitely Not'

Trudy Lieberman of the Columbia Journalism Review catches CNN getting something right:

Medicare ‘bankruptcy’: CNN gets it right, by Trudy Lieberman: Hooray for, for fact checking the often-heard claim of Medicare’s “impending” bankruptcy. CNN’s contribution sets a high bar...
The “bankruptcy” language comes up a lot. ... But is Medicare really going bankrupt? Definitely not, says CNN. The network is correct, and the point is crucial.
How did CNN pull away from the fact-checking pack on this one? ... First, CNN reported, as CJR has urged news outlets to do, that only one part of Medicare is in potential trouble—the Hospital Trust Fund, which is financed by payroll taxes. The other parts of Medicare, including Part B, which finances doctor visits, lab tests, and outpatient services, “are adequately financed for now,” Medicare trustees have said. ...
CNN pushed further and asked a logical question that most reporters writing about Medicare have missed. When the magic date for “bankruptcy” arrives—2024 according to the Dems, or 2016 if the ACA disappears in a Romney presidency—would Medicare really disappear? Jonathan Oberlander, a health policy expert at the University of North Carolina, told CNN that ... “Medicare is not going bankrupt. Medicare would still have most of the necessary funds to pay those expenses and other parts of the program would be unaffected. Medicare won’t go bankrupt in the literal sense in 2016 or 2024 or 2064—or ever.” The Centers for Medicare and Medicaid Services, which runs the Medicare program, said this year that even in 2024 the Medicare hospital trust fund could still pay 87 percent of its estimated expenditures, and noted that, “in practice, Congress has never allowed a Medicare trust fund to exhaust its assets.” ...
That’s not to say that Medicare’s cost explosion is not a problem. How to control cost—not just for Medicare but for al the rest of the healthcare system, too—is a central issue that the press needs to clarify. ...

Friday, August 31, 2012

Bad Political Discourse Drives Out Good

Chris Dillow tries to explain the poor quality of political discourse:

Adverse selection in political discourse, by Chris Dillow: ...there is adverse selection in political debate: fanatics are given attention whilst sober, rational voices are overlooked. There are four channels through which this happens:
- Fanatics think their beliefs are so important and true that they set up lobbying groups and "thinktanks" to promote them, whilst rational people devote less time and organization to pushing their opinions. ...
- Producers want "good" TV/radio, and this means having a violent debate between people with well-defined positions who can talk in soundbites. ...
- People mistake confidence for knowledge, and so give too much credence to the irrationally overconfident.
- A tendency has emerged for people to respect strongly-held opinions... This, of course, in the opposite of what should be the case. The fact that someone believes strongly in something is a reason for us to disrespect their belief and to discount it as the product of a fevered, fanatical and irrational mind.
What I'm suggesting here is an adjunct to something Mancur Olson said in the 1960s. He pointed out that small numbers of people with large interests would organize themselves better than large numbers with smaller interests. The upshot, he said, was that politics would give too much weight to small vested interests to the detriment of aggregate well-being. ... Small groups with strongly-held beliefs are given more credence and deference than they should have.
And this, in turn, implies that the mass media can sometimes undermine rational political discourse rather than promote it.

Thursday, August 30, 2012

Agents of Misinformation

Steve Benen:

A pass-fail test, by Steve Benen: At the Republican National Convention last night, Paul Ryan told so many demonstrable lies, he raised important questions about his character and what's left of his integrity. What matters next, however, is whether anyone notices.
It's come as something of a relief to see so many media professionals go after Ryan for his dishonesty last night. ... I'm well aware of the fact that the vast majority of Americans will never see any of this scrutiny, but other reporters, editors, and producers will, and if a consensus begins to emerge that Romney/Ryan is fundamentally dishonest, this is likely to influence the public's perceptions of the race.
But let's not ignore those inclined to give Ryan a pass. ...
Not to put too fine a point on this, Ryan, like his running mate, tells obvious falsehoods because he's confident there will be no consequences. He simply assumes he can lie with impunity because the media doesn't care to separate fact from fiction.
This is a critical test of the political world, and a few too many are failing.

They have been doing this with economics for a long time, but it has been difficult for reporters to figure out the difference between legitimate disputes about theory and evidence within the profession, and outright misrepresentations (it's not that hard in every case, and it's frustrating reporters still don't do better than this, but it's at least understandable in some instances).

But this year it is rising to a different level, and what used to bug me about the right's presentation of economics has now been extended to their discussion of everything. The campaign is pretty much laughing at the fact checkers and saying, so what?

The press is supposed to be helping America understand, not helping to mislead them, and it's time for reporters -- political reporters in particular -- to take a long, hard look inward and figure out where they've gone so wrong.

Sunday, August 26, 2012

David Brooks is 'a Slippery Fellow'

David Warsh on David Brooks:

Brooks is a prestidigitator, that wonderful word borrowed from the French, descended from the Latin, meaning juggler, deceiver. He is all the more successful because of his earnest nice-guy manner. But he’s a slippery fellow, frequently passing off Tea Party sleight-of-hand as moderate magic. That’s what makes him fun to read. It also drives his NYT stable-mate Paul Krugman to distraction.

More here.

Friday, August 24, 2012

'Evidence vs. Ideology' and 'Romney’s Lying Machine'

Laura D’Andrea Tyson:

Evidence vs. Ideology in the Medicare Debate, by Laura D’Andrea Tyson, Commentary, NY Times: When formulating public policy, evidence should be accorded more weight than ideology, and facts should matter... The ... Romney campaign has been deliberately misrepresenting President Obama’s Medicare record.
Mitt Romney characterizes the $716 billion of Medicare savings over the next 10 years, contained in the Affordable Care Act, as President Obama’s “raid” on the Medicare program to pay for his health care program. This fear-mongering is simply untrue. These savings result from reforms to slow the growth of Medicare spending per enrollee – there are no cuts in Medicare benefits. ...
Both Governor Romney and Representative Paul D. Ryan have promised to repeal the Affordable Care Act and with it the reforms behind the $716 billion in Medicare savings (although Mr. Ryan duplicitously counts the savings from these reforms in his deficit-reduction plan). Medicare beneficiaries would ... lose the benefits..., and they would be forced to pay higher premiums and co-pays as a result of faster growth in Medicare costs.
President Obama’s health care plan is not a raid on Medicare; it is an investment in a stronger system. If the Affordable Care Act had not met this standard, the AARP would not have endorsed it. ...
Now Mr. Ryan has espoused – and Governor Romney has embraced — a proposal to transform Medicare into a premium support system. ... There is no evidence that such a system would control Medicare spending more effectively than the current Medicare program strengthened by Affordable Care Act reforms. Indeed,...the C.B.O. has concluded that ... such plans would drive up total health-care spending per Medicare beneficiary...
A voucher system would do little to control the growth of health care costs, but it would shift their burden onto Medicare beneficiaries in the form of higher premiums and reduced care. Cost-shifting should not be confused with cost containment. ...
A “serious” deficit hawk committed to saving and strengthening Medicare, not one whose primary goals are repealing health-care reform and cutting taxes for the wealthy, would base his Medicare plan on the evidence. ...

Robert Reich is astounded at the Romney-Ryan campaign:

Romney’s Lying Machine, by Robert Reich: I’ve been struck by the baldness of Romney’s repetitive lies about Obama — that Obama ended the work requirement under welfare, for example, or that Obama’s Affordable Care Act cuts $716 billion from Medicare benefits. ...
Every campaign is guilty of exaggerations, embellishments, distortions, and half-truths. But this is another thing altogether. I’ve been directly involved in seven presidential campaigns, and I don’t recall a presidential candidate lying with such audacity, over and over again. Why does he do it, and how can he get away with it?
The obvious answer is such lies are effective. Polls show voters are starting to believe them... Romney’s lying machine is extraordinarily well financed. ... Romney’s lying machine is working.
But what does all this tell us about the man who is running this lying machine? (Or if Romney’s not running it, what does it tell us about a man who would select the people who are?)
We knew he was a cypher — that he’ll say and do whatever is expedient, change positions like a chameleon, eschew any core principles.
Yet resorting to outright lies — and organizing a presidential campaign around a series of lies — reveals a whole new level of cynicism, a profound disdain for what remains of civility in public life, and a disrespect of the democratic process.
The question is whether someone who is willing to resort to such calculated lies, and build a campaign machine around them, can be worthy of the public’s trust with the most powerful office in the world.

The press is completely dropping the ball in its duty to inform voters (surprise!). If stories consistently opened up with something along the lines of "The Romney campaign continued to make lies and misleading inferences the centerpiece of its campaign today...," this would stop. (It would also be worth noting, I think, that making lies about the other side the most prominent feature of a campaign is a pretty good indication that the candidate has no new ideas of his own to present. But simply pointing out the lies -- and the massive number of flip-flops of convenience -- would go a long way toward fulfilling the duty of the press to inform voters rather than mislead them by presenting false claims as legitimate debate.)

Wednesday, May 30, 2012

Economic Dark Ages?

Stan Collender is driven to shrillness:

Is This The Economic Dark Ages In The U.S?, by Stan Collender: ...a behavior -- bald-face lying --... has become so blatant and commonplace among Republican policymakers on economic issues that any one of them who is even slightly honest and candid now would be both an absolute rarity and a welcome relief.
And the fact that the GOP lying about the economy...and especially the so accepted and expected means that any Republican who wasn't jump-the-shark ridiculous on these issues wouldn't be allowed to stay in the party much longer. ...
House Speaker John Boehner (R-OH) ... easily qualifies as the weakest and least effective Speaker in my lifetime and has to be included on the list of the all-time worst in U.S. history, demonstrated yet again that he'll say and do anything to stay speaker even when what he's saying about the budget can easily be shown to be nonsense and when he knowingly and without giving it a second thought  threatens the well-being of the U.S. economy.
I'd say this doesn't bode well for the outcome of this year's federal budget debate, but that's both obvious and an understatement. It actually points to the a period in U.S. history that is very likely to be labeled by historians as its economic dark ages.

I think that reporting on economic issues has improved, and that blogs have something to do with that. But when it comes to political reporting on economic (and other) issues, it's just as disappointing as ever. If there's no reputational or other costs associated with this behavior, why stop?

Sunday, April 15, 2012

Turmoil in the Daily Newspaper Business

David Warsh on the viability of the newspaper business:

The Daily Melody, Economic Principals: Turmoil continues in the daily newspaper business. The once-mighty Philadelphia Inquirer was sold last week for a paltry $55 million. The Denver Post decided to put its proprietary local news on the front page and move its commodified national items to the second section. And another hopped-up hedge fund operator explained to gullible Forbes readers why The New York Times “as we know it” would disappear by 2015. (How do I keep track of this stuff?  Like everyone else interested or involved in the industry, I read Jim Romenesko.)

Newspaper publishers should think a little harder about the distinction between searching and browsing.  Leon Wieseltier framed the distinction nicely the other day in Going to Melody, a poignant little essay in The New Republic about Melody Records, an old-fashioned music store near Dupont Circle in Washington.,D.C., that had gone out of business.

Wieseltier was bereft. For thirty years, he had regularly prowled Melody Record’s aisles, looking for new releases, schmoozing with its knowledgeable clerks, discovering items of chamber music and jazz he otherwise might not had known existed, defending his affection for Rihanna. His visits had been motivated not so much by acquisitiveness, he wrote, but by inquisitiveness.  He went “to engage in the time-honored intellectual and cultural activity known as browsing.”   He elaborated:

Continue reading "Turmoil in the Daily Newspaper Business" »

Sunday, March 11, 2012

Who Is More Likely to Survive the Digital Age, The Washington Post or The New York Times?

Which newspapers are most likely to survive?:

She Who Fights and Runs Away…., by David Warsh: For 150 years, daily newspapers have been suppliers of real-time narrative to industrial democracies around the world. They no longer enjoy readers’ undivided attention — but then they didn’t for most of that time. First magazines, then radio, newsreels, television, and recently the Web cut sharply into their mindshare, periodically unsettling but not displacing newspapers in the hierarchy of authority.

Recently the advent of search advertising has cut real newspaper revenues, perhaps in half, for many years to come. Yet print newspapers are still the way we establish the horizon of day-by day events. Because of their nature – daily, finite, permanent, and convenient – they are likely to remain the source of this baseline for years to come.

So pity The Washington Post, right? ... Vanity Fair last week published an article about retrenchment at the paper, “Ghosts in the Newsroom.” In it, Sarah Ellison wrote,

The desire to compete as a journalistic enterprise on a national or international level – to do so comprehensively and consistently – seems to have been beaten out of the Post. The disaffection on the newsroom floor is audible and undisguised.

The deeper situation at the Post is probably just the reverse. You wouldn’t have thought it possible that a seasoned reporter like Ellison (who once covered the newspaper industry for The Wall Street Journal) could write about a newspaper without discussing Google and the invention of search, but that is Vanity Fair for you, the journal of choice for nostalgia buffs.

The Post is clearly moving to preserve its independence. It is the Times which seems at risk, thanks to a go-for-broke strategy.

The news business is turning into a race among old champions and new entrants, more quickly than most people realize. In the last few years, Bloomberg and Thomson, both data-base businesses, have moved into news in a big way. Bloomberg, which started life as a library of bond prices, built its 2,000-person news service from the ground up over the last twenty years. Thomson, which began life in 1934 with a single Canadian newspaper, grew to a chain that included the Times of London, before getting out of the newspaper business altogether, in order to invest in financial services and legal publishing, Ten years later Thomson came roaring back into the news business through the purchase of the similarly extensive Reuters service. (A somewhat fuller account is here.)

Michael Bloomberg and David Thomson are each worth around $20 billion – perhaps a dozen times more than all the Sulzbergers (of the Times) and Grahams (of the Post) put together. Both companies have gone on hiring binges recently, luring top reporters with promises of unspecified glories yet to come, signaling their intention to enter the mainstream business one way or another. David Thomson has told his editors that he wants Pulitzers, and, presumably, so does Michael Bloomberg, currently in his third and last term as Mayor of New York. Proclaiming a new editorial approach is merely the first step As Michael Wolff pointed out the other day, the Financial Times, now owned by the publishing conglomerate Pearson, is probably the next big paper to go on the block. The New York Times’ market capitalization is about $1 billion, that of the Post about $3 billion.

What are the newspapers doing about maintaining their independence? The Post has been cutting costs and buttressing its unassailability. Warren Buffet, a long time investor to the company, took Ellison to lunch to explain the logic of a “moated business”: a profitable one upon whose territory others can’t encroach. What the Post has going for it is a large and prosperous local market. He might have added that a high penetration rate – many people read it, thanks to relatively low prices – keeps advertising rates relatively high. Add to that an intelligent and resolute chief executive, Katharine Weymouth, granddaughter of the legendary publisher Katharine Graham. It just lacks the dominant advertising monopoly it once enjoyed – and the swagger that accompanied near-monopoly profits. Logic says that once its costs are brought in line, the Post should be nicely profitable again, and other geographical franchises – Los Angeles and Chicago in particular – should eventually be strong as well.

The Times often seems to be doing just the reverse. As a national paper in competition with the WSJ, it has many close substitutes, among readers and advertisers alike. Its strategy seems downright reckless: keep staffing high, expand various sections, price aggressively (a daily paper costs $2.50, vs. $2.00 for the WSJ), and deepen the Web presence.. Late last year chairman and publisher Arthur O. Sulzberger Jr. unexpectedly propelled chief executive Janet Robinson into an early retirement, paying her nearly $24 million, according to a proxy statement mailed last week – apparently to assure her silence. The company sold its regional papers a few days later.

If these were the only considerations, you would have to admire the Times’ digital daring. Its website is superb. Its desire to compete as a journalistic enterprise on a national or international level is as strong as ever. And the daily newspaper itself, as former executive editor Bill Keller said the other day, is what it is – a glorious aspiration, never quite achieved, against which all other efforts must be judged.

It is the revenue stream that is lacking. The Times hasn’t paid a dividend since December of 2008. Its stock is selling for around $6 a share. (The Post, with about a twentieth as many shares, closed at week at $387. It pays a $9.80 dividend.) ... The Sulzberger cousins are not the Bancrofts, who sold the Wall Street Journal to Rupert Murdoch; a sense of public trust is in their DNA. But neither can the cousins afford to own and operate their newspaper for free.

The owners of the Post have shown that they know what they must do to survive; in scaling back their ambitions, they may maintain their autonomy. (I am leaving its Kaplan Inc. educational services subsidiary for another day.) The Times has expanded instead of prudentially cut back. They are living on moonbeams. The golden age of newspapers is definitely over. The exciting days of a great transition have begun.

Saturday, January 14, 2012

National Security Spending, Not Entitlements, "Run Amok"

Once again, Jeff Sachs takes on the editorial page of the WSJ and tries to expose the "big lie of our time" (or one of them anyway):

How the Wall Street Journal Misleads About Federal Jobs, by Jeff Sachs: The editorial board of Rupert Murdoch's Wall Street Journal has a simple game. They want to cut taxes for the rich and government services for the rest, and end regulations of banks and the environment. They support taxpayer-financed bailouts of Wall Street when needed. They will twist any facts in the service of these goals.
Today's lead editorial, with its graph of "Obama's Growing Payroll," is a perfect example... The gist of the editorial is that Obama is presiding over a massive increase of government, exemplified by the surge of civilian employees. The graph shows a striking rise of federal employment from around 1.875 million in 2008 to 2.1 million in 2011. (I reproduce this as Figure 1 below).
The Journal neglects the fact that today's 2.1 million workers is actually identical to the number of Federal employees in 1981 at the start of the Reagan Administration, 1989 at the end of the Reagan Administration, and 1993 at the end of the Bush Sr. Administration. The numbers went down slightly after that ... with a decline in Defense Department civilian employees, a decline that was probably offset by the rise of private defense contractors (not included in the OMB tables). There is no long-term trend at all. (I show this as Figure 2 below).
The Journal endlessly tries to portray the "growth of government" as a social welfare system run amok. The editorial implies that President Obama is repeating LBJ's Great Society by building up giant welfare and regulatory programs reflected in the "boom" of federal employment. But where did this so-called "boom" (actually a tiny boomlet) actually appear? In Great Society programs? In entitlements?
No, the increase in employment is mainly in national-security-related employment: the military, homeland security, and justice (including prisons, FBI, drug enforcement, and the like). Welfare and entitlements programs little to do with it. If we parse the increase of 225,000 federal jobs between 2008 and 2011, three-fourths came in the Defense Department (+84,000), Homeland Security (+28,000), Justice (+13,000), and Veteran's Affairs (+45,000).
Of course the Journal's entire argument is ... a red herring, since the increase of 225,000 jobs represents all of 0.0017 of U.S. non-farm employment of 131 million workers. The entire federal civilian workforce is a mere 1.6 percent of the total non-farm employment. The Journal is taking tiny fluctuations and making them into a federal case, so to speak, for its propagandistic purposes.
The actual fact of relevance is that the federal government has been declining as a share of national non-farm employment, from 2.3 percent in 1981 to 1.6 percent in 2011. ...
The big lie of our time is that the federal government is expanding out of control. ... For government services that count for the 99 percent, the federal government is shrinking, alas, no matter which phony figures the Wall Street Journal throws our way.

Saturday, November 19, 2011

Both Parties are Equally to Blame Even When They're Not

No matter how much the Democrats give up in negotiations, the media still accuses them of refusing to compromise:

Supercommittee Democrats Insist on Not Giving Republicans Everything, by Dean Baker: In much of the media it is the rule that both parties are equally to blame regardless of what the facts of the situation are. Hence the lead sentence in the Post's article on the supercommittee's deadlock tells readers:

"Congressional negotiators made a yet another push Friday to carve $1.2 trillion in savings from the federal debt, but remained stuck in their entrenched positions on tax policy even as the clock was running down on their efforts to reach a deal."

It would be interesting to know how the Post decided that the Democrats have an entrenched position. They have offered dozens of plans, many of which would not involve having the rates return to their pre-Bush level, as is specified in current law. By contrast, the Republicans have consistently put forward proposals that would keep the taxes on the wealthy at their current level or lower them further.

Even though the Democrats have shown every willingness to cave, the Post refuses to give them credit for it.

I wish this was accurate, i.e. that Democrats did have an entrenched positions on tax increases and other things. We call these principles, and there's nothing wrong with having them or defending them.

Sunday, September 18, 2011

What Liberal Bias?

Good question:

Fair and balanced after all? The bias of the US press, by Riccardo Puglisi and James M. Snyder, Jr.,Vox EU: ...In a recent and influential paper, Tim Groseclose and Jeff Milyo (2005) ... conclude that the US media display an overall liberal bias, i.e. most media outlets are to the left of the average American voter. ... The results in Groseclose-Milyo are likely to become salient in the public debate over the next year, as Groseclose has recently published Left Turn: How Liberal Media Bias Distorts the American Mind, which draws heavily on their findings.
Because of its novelty, prominence, and stark conclusions, the original Groseclose-Milyo paper has been subject to several critiques... For example, John Gasper (forthcoming) shows that the liberal bias essentially disappears if we exclude the citations of a single group – the National Taxpayers Union – from the analysis. ...
[I]n our paper “The Balanced US Press” (2011a)..., we ... find that, on average, newspapers are located almost exactly at the median voter in their home states. ...
Economists often point out that rational citizens are less likely to be influenced by media bias if they learn that this bias exists. However, we might also worry about the political and policy consequences of wrongly persuading citizens that media outlets have a left-leaning position overall, when in fact they are balanced. That is: What happens if citizens are convinced to “undo” a bias that does not exist?

Thursday, July 28, 2011

Unskilled Labor

David Frum:

I used to write editorials for the Wall Street Journal... So I’m well aware of the challenge faced by those assigned to compose these documents. The strict demands of the paper’s ideology do not always lie smoothly over the rocky outcroppings of reality. It can take considerable skill to match the two together.

Unfortunately, many of the writers aren't that skilled.

He goes on:

In that regard, this morning’s lead editorial about the debt-ceiling crisis is a true masterpiece.
If you were to write a story about government debt, you’d probably be inclined to write about the two sets of government decisions that produce deficits or surpluses: decisions about expenditure and decisions about revenue. You’d want to do that not only as a matter of fairness, but also as a matter of math.
And that’s why, my friend, you would wash out as a WSJ editorialist. They wrote this editorial without any reference to revenues whatsoever. Boom! Gone! Don’t deny reality. Defy reality. ...
One of the many traps and impediments facing a Journal editorialist writing about debt is that up until 2009, the US debt burden rose most under the two presidents the Journal most ardently supported: Ronald Reagan and George W. Bush. The debt burden declined most under the presidents the Journal most despises – Dwight Eisenhower, Bill Clinton and Jimmy Carter.
It must have taken some hunting, but the Journal managed to find a chart that did just the opposite: federal payments to individuals as a percentage of federal outlays. What’s so great about this chart is that it excludes two of three biggest federal spending programs: Medicare and Medicaid, both of whose costs rose faster in the Bush 2000s than in the Clinton 1990s. ...

Saturday, June 18, 2011

Money Talks on Right-Wing Radio

Will Wilkinson:

Politics' new cash nexus, by Will Wilkinson: Rush Limbaugh loves the Heritage Foundation. ... Sean Hannity is also a vocal Heritage fan. Mark Levin likes to talk up Americans for Prosperity... For his part, Glenn Beck prefers Freedomworks. If you ask these popular right-wing talkers why they promote these groups on air, they'll tell you they believe in the work they do. Also, the pay's pretty good.

In Politico, Kenneth Vogel and Lucy McCalmont report on the cozy financial relationships between conservative talk-radio stars and a number of right-leaning research and advocacy institutions. 

In search of donations and influence, the three prominent conservative groups [Heritage, Freedomworks, and AFP] are paying hefty sponsorship fees to the popular talk show hosts. Those fees buy them a variety of promotional tie-ins, as well as regular on-air plugs ... often woven seamlessly into programming in ways that do not seem like paid advertising. ...

The Heritage Foundation pays about $2 million to sponsor Limbaugh’s show and about $1.3 million to do the same with Hannity’s – and considers it money well spent. ... While the deals differ, most provide the sponsoring group a certain number of messages or so called “live-reads,” in which the host will use a script, outline or set of talking points to deliver an advertisement touting the group and encouraging listeners to visit its website or contribute to it.

Some sponsorship deals also include so-called “embedded ads” in which the sponsors’ initiatives are weaved into the content of the show... But officials with the groups stress that they sought out the hosts because they were already ideologically in sync with their causes.

... More interesting than the superficial pay-to-play aspect of this story is what it reveals about the increasing integration of the conservative economy of influence. What we're seeing is a set of once disparate pieces coming together into a powerfully unified persuasion machine. Rich and not-so-rich people give to think tanks and advocacy groups because they believe, mostly correctly, that these organizations can do more with their money to promote their political values than they can do on their own. But the influence of these organizations is limited both by their budgets and their ability to get their messages out. Conservative talk radio has proven itself an incredibly popular and powerful persuasive force. They offer Washington politics and policy shops both a huge potential donor base and a megaphone. It helps Heritage immensely to have Mr Limbaugh citing their studies on air. But the persuasive force of their message is even greater when Mr Limbaugh's listeners choose to literally "buy in" to the Heritage Foundation by becoming donors. Over time, Heritage's financial support subtly and not-so-subtly shapes Mr Limbaugh's message. He, and thus his audience, comes to think ever more like Heritage. And his audience, who become ever more personally invested in Heritage, become correspondingly more receptive to his Heritage-influenced messages. The partisan public has its independent general policy instincts, but it tends to adopt its more specific policy opinions from trusted partisan elites. Traditionally, these elite opinion-leaders have been politicians. But I think we're witnessing a process through which professional "movement" elites in Washington, DC political non-profits are actively shaping public opinion via sympathetic mass-media intermediaries. Conflict between the Republican "establishment" and the tea-party movement may well reflect this shift in the balance of elite persuasive power.

(Are analogous forces at work on the left? I imagine there are, and I would like to hear about them. But I know that world much less well.) ...

When money talks, it doesn't always know what to say. Those trusted to write the scripts wield real power. The amplification and consolidation of this power through explicit financial deals between "freedom movement" institutions and conservative talk-radio superstars is a potentially profound development in American politics. If you ask me, the progressive fixation on campaign finance is badly misguided. Money shapes the course of our democracy at least as much through the complex confluence of popular mass media, Washington's institutional ideologues, and their far-flung multitude of impressionable donors. This a tricky story to tell, and it's hard to say what, if anything, should be done about it. But this is where a lot of the action is.

I don't have much to add, so I am mostly interested in hearing your thoughts on this. My thoughts, which I haven't considered very carefully, are first that if this is actually advertising in some form, and it seems clear that it is, don't we have rules about presenting products honestly to the public? When outright lies are used to sway the public, and there's no doubt this happens, should regulators step in and take action? If a producer can't make false claims about a competitor, why do we allow it in the political context? Is it simply the difficulty of picking referees, defining truth and lies, etc.? The other thought is about anti-trust legislation (and our failure to enforce it). To what extent is this all driven by concentrated ownership of media outlets? If there was more competition in this industry, would this be less of a problem?

But as I said, I'm mostly interested in your thoughts.

Saturday, June 04, 2011

The Post Goes Negative on the Economy

This is somewhat surprising. Dean Baker takes the Washington Post to task for being too pessimistic about the economy:

The Post Goes Negative on the Economy, by Dean Baker: The May jobs report was bad news, but it was not as bad as the Washington Post and many other news outlets made it seem. When we get monthly data it is always important to remember that we are pulling out a snapshot from a longer period of time. ...
For this reason it is important to take the 54,000 jobs created in May against the backdrop of 234,000 jobs added in April. Employers who hired many workers in April were likely to add few or none in May. ...
It is more likely that the April numbers overstated the underlying rate of job growth in the economy and the May numbers understate it, than there was some huge shift in the economy between the two months. Still, the average rate of job growth over the last three months was just 160,000.
It takes roughly 90,000 jobs a month to keep even with the rate of growth of the labor force. This means that if the economy stayed on this growth path, it would take almost a decade to get back to normal levels of unemployment. Furthermore, with house prices falling again and another round of state and local cutbacks kicking in next month, it is more likely that the job growth will be slowing than speeding up in the months ahead.

It's "not as bad as the Washington Post and many other news outlets made it seem"? The prospect of "almost a decade to get back to normal levels of unemployment" is very bad news. I don't usually disagree with Dean, but my reading of the article is that it is a fairly accurate picture of the problems now, and the potential pitfalls ahead. If the Post wants to help us try to goad legislators into action by admitting the economic recovery is faltering, great, welcome aboard (the article doesn't actually call for government action, but at least it doesn't dismiss the signs of weakness as transitory).

Here's a bit from the article:

Job creation withers in May as doubt reigns, by Brady Dennis, Washington Post: Behind the hard numbers in Friday’s dismal report on the job market are scared small-business owners, slashed state budgets, dried-up federal stimulus funds and a lingering uncertainty that has taken hold from corporate boardrooms to factory floors around the country. ...
It is the second time that growth has stumbled; a similar scenario played out last summer, reflecting the long, uneven process of clawing out of a recession spurred by a financial crisis.
Employers from coast to coast describe a situation in which tepid economic growth alone isn’t enough to prompt them to add to their payrolls. Sales have been rising, but slowly and tenuously. Doubts about the future have continued to chip away at confidence...
That standstill showed in the numbers released Friday, which revealed that the job market weakened across a wide range of industries in May. ... The largest job losses were in a public sector that is rapidly retrenching. Local governments have been cutting jobs in vast numbers — 28,000 in May — trying to eliminate their yawning budget gaps by dismissing public employees.
The public school district in Saginaw, Mich., for example, gave pink slips to 12 percent of its employees, including dozens of teachers, custodians and bus drivers. The reasons are familiar: Federal stimulus money is drying up; states are slashing their budgets, and cities and schools are following suit; and health care, fuel and other costs are rising. ...
In contrast with the previous three months, when the private sector was expanding its payrolls aggressively enough to maintain solid job growth despite the loss of government jobs, in May the private sector downshifted. Even as professional and business services and the health-care industry added thousands of jobs, gains in most other sectors slowed to a crawl or went backward. ...

Is that too negative?

Thursday, June 02, 2011

Now Change the Rest

David Warsh urges The Economist to remake itself:

Now Change the Rest, Economic Principals: The Economist was founded in 1843 by James Wilson, a hat manufacturer temporarily brought low by one of global capitalism’s first identifiable business cycles. By a series of courageous re-inventions over 168 years, it has managed to become, and then remain, one of the most influential editorial voices in the world.

It is time for another of those periodic reinventions. Wilson’s original prospectus announced his determination to take part in “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.”

At the time, as unworthy, timid ignorance he had in mind mainly Great Britain’s Corn Laws, protectionist measures against the importation of grain adopted thirty years before as part of a burgeoning battle between landowners and manufacturers. The Economist quickly won its battle for free trade, whose advantages only recently had been perceived. Its devotion to the advancing frontiers of knowledge has been often redeployed over the years. ...

That bias in favor of intelligence was on display again last week with the magazine’s cover story. ... The lead editorial put the matter succinctly:  “Humans have changed the way the world works. Now they have to change the way they think about it, too.” ...

The Economist doesn’t quite come out and assert that global warming is taking place. ... But its survey goes on to give a good précis of the biogeochemical problems facing humankind: atmosphere, water, energy, food, species diversity. The article concludes that the evidence is strong that a new age in the history of the earth had indeed begun. ...

Here is the remarkable thing. Nowhere in either essay – the editorial or the article itself – do the words “government” or “governance” appear. This is not altogether surprising. The Economist was founded in the early days of scientific economics, a time of powerful mood swings, Malthusian gloom dominating in one decade, technological optimism in the next. Delight in market organization was in the air... The magazine’s preference emerged early on for hands-off policies of laissez-faire as against government control.

Yet the magazine’s greatest editor, Water Bagehot, recognized in the 1860s that there were responsibilities in emergent capitalism that only governments could assume, centralized control of the banking system chief among them. Eighty years later, in the 1940s and ’50s, the magazine gradually came to support Keynesian views that governments bore responsibility for mitigating the ups and down of the business cycle.

Today a further change is required if the editors are to continue to prefer intelligence to ignorance. ... The shift required – one that already has begun under editor John Micklethwait, but one which still has far to go – involves the recognition that the social sciences have begun to integrate concepts of governance, organization and cooperation into the center of their conception of the world, rather than confining them (as they were in The Wealth of Nations)...

Giving up a reflexive faith in laissez-faire while deepening its appreciation of market technologies will not be easy. A telling subhead in last week’s editorial asserts, “The new geology leaves all in doubt” – an echo of a famous sentiment expressed when the collective certainties of the seventeenth and eighteenth centuries – the Biblical account of Creation and the comfort of a geocentric universe – were giving way to the heliocentric understanding of the cosmos. ... Humankind must accept responsibility not just for nature, but for itself – a new age not just for geology but for for political economy as well..

I've talked about this quite a bit in the past (e.g.), so I won't dwell on it, but to me significant market failures -- including but not at all limited to monopoly power -- present a clear and compelling case for government intervention. Government solutions to these problems have been held up, in part, by the idea that market failures are self-correcting. Monopolies will be challenged by new entrants or new products, markets will provide missing information, etc., etc. These ideas gave policymakers who were looking for an excuse to keep government on the sidelines a reason to do just that.

But it hasn't worked. Market failures are self-correcting in some cases, or the consequences of the market failure are too small to justify government taking action. But there are important cases where the problems have not been corrected automatically, and our failure to step in and take action has had or could have significant negative consequences (e.g. market failures, if not the cause of the financial crisis, certainly made it worse, and we have done very little to offset important failures in energy markets that are making the climate change problem harder to solve).

We do need a change in attitude, and not just from the editorial leaders at The Economist (some writers there already show progress). Policymakers and the public must also come to understand that there is an important role for government to play is overcoming these problems.

Thursday, May 12, 2011

"The Wall Street Journal's Misleading Income Chart"

Bruce Bartlett points to a Tax Foundation article that accuses the WSJ's editorial page of "a textbook example of how to lie with statistics.": The Wall Street Journal's Misleading Income Chart. When the Tax Foundation questions someone's reliability, you know a line has been crossed.

Wednesday, April 27, 2011

"Decoding Ben Bernanke"

Here's the video I did on Bernanke's Press Conference that I mentioned in an earlier post: Decoding Ben Bernanke:

Green Shoots and the Fed

Here are some responses to Bernanke's Press conference from The Room for Debate:

Here's mine:

The Fed’s dual mandate requires it to pursue both full employment and price stability. Currently, however, the Fed is falling short on both of these goals.
Employment is far below its full employment level, and inflation is running below the Fed’s preferred range of 1.5 to 2.0 percent. Inflation is expected to rise a bit in the short-run due to rising commodity prices, but the Fed says it expects commodity price increases to be transitory.
Thus, none of the Fed’s forecasts show any long-run concern about inflation at all. The main question I wanted to hear Bernanke answer is, given that inflation is expected to remain low, why the Fed isn’t doing more to help with the employment problem? Why not a third round of quantitative easing?
Bernanke was asked this question, but his answer was unsatisfactory. The potential benefit of further policy moves by the Fed is higher growth and lower employment. The potential cost of more quantitative easing is inflation. So the decision on whether to provide more help to labor markets comes down to a comparison of the expected employment benefits to the expected inflation cost.
Even though there is no evidence of a problem in the Fed’s own projections, and the prices of long-term financial assets dependent upon future inflation show no evidence of inflation worries either, Bernanke nonetheless said that he believes the costs have risen relative to the benefits — that is, the Fed’s worry about inflation is standing in the way.
But I think there is something else behind the Fed’s reluctance to continue easing. The Fed first began seeing “green shoots” in April of 2009, a full two years ago. At every step since, the Fed has used the prospect of better times just around the corner as a reason to downplay the benefits of further easing.
But the growth of the green shoots has been stunted, or they have wilted away entirely. In retrospect, more aggressive action by the Fed was warranted in every instance. Perhaps this time is different — I sure hope so — but the recovery has been far too slow to be tolerable. Green shoots require more than hope, they require the nourishment, and with fiscal policy out of the picture it’s up to the Fed to provide it.

Bernanke's Press Conference

I am writing up my reaction to Bernanke's press conference, and it's basically the same as this. More later. I also did a video for CBS MoneyWatch discussing the conference and I'll post that as soon as it's available (Here's a link to the video).

Update: Here's Tim Duy's reaction:

Very High Bar for QE3, by Tim Duy: My first thoughts: The FOMC statement was consistent with my expectations, while Federal Reserve Ben Bernanke sounded slightly more hawkish than I anticipated.  The latter confirms the view I took two weeks ago – near term inflation gains were not sufficient to justify altering the current policy stance, but would derail any additional increases to the balance sheet beyond June.

The FOMC statement itself was largely straightforward.  Arguably a bit of a downgrade of the economy (as CR notes, the “firmer footing” language has disappeared) and a little more talk about inflation.  The new economic projections reflected these alterations, with growth forecasts brought down to pretty much the same range when the Fed initiated QE2, while near-term headline inflation forecasts are higher.

The initial phase of Bernanke’s press conference was also in line with my expectations.  He noted that the expectations for trend growth and the natural rate of unemployment were beyond the control of the Fed, while inflation was directly determined by monetary policy.  He explained the reasoning for a positive rate of inflation, explicitly pointing to the concern about deflation, defined as falling wages and prices.  This was, I believe, the last we heard about wages.

In response to the Q&A portion, he said the impending weak Q1 growth numbers are the result of transitory factors (defense spending, exports, weather), and “possibly less momentum.”  The latter phrase was a bit disconcerting and should suggest a predilection toward additional asset purchases beyond June, but apparently the FOMC intends to focus on the transitory nature of the numbers.  See again my earlier piece.  When questioned about the timing of any exit, Bernanke explained the relevant factors, including the sustainability of the recovery, the strength of the labor market, the direction of inflation, and resource slack.   Not surprisingly, he gave no timeline to tightening. 

Regarding the end of QE2, he reiterated the “stock” view of the balance sheet.  Essentially, the pace of accumulation is less important than the size of the balance sheet, and there were no plans to shrink assets.  Indeed, he suggested the first step toward tightening would be to stop reinvesting assets as they mature or are redeemed.  I thought he handled the Dollar questions well – throwing it back in the lap of Treasury Secretary Timothy Geithner and claiming, rightly in my opinion, that the best thing for the Dollar over time is that the Fed pursues policies that satisfy its dual mandate.

The most interesting comments came in response to questions about whether the Fed should do more to lower unemployment and if QE2 is effective, shouldn’t the program continue?  Here was a more hawkish Bernanke.  As I noted earlier, growth forecasts returned to the pre-QE2 range, which should be a red flag.  Unemployment remains high, with only moderate job creation.  Core-inflation remains low, while the impulse from commodity prices on headline inflation is expected to be temporary.  Finally, he claims that QE2 was in fact effective.  So why not do more?  Because the Fed needs “to pay attention to both sides of the mandate” and the “tradeoffs are less attractive.”  Much talk by Bernanke at this point about inflation expectations, and the importance of maintaining those expectations, and not much (none, I think), about the issue (or non-issue) of wage inflation. 

Apparently the threat of headline deflation off the table, Bernanke is not inclined to pursue sustained easing despite low core inflation and high unemployment.  Again, I am not entirely surprised, except that Bernanke appear to suggest we are much closer to an inflation tipping point than I would expect.  He could have tempered these comments with a more forceful discussion of labor costs, but did not.  It seems clear these comments were intended to calm the non-existent bond market vigilantes, but is it consistent with the outlook?  Arguably, no.  For what it’s worth, I think Bernanke appeared most uncomfortable during this portion of the conference. 

Bottom Line:  When I look at the revisions to the Fed’s outlook and listen to Bernanke, I get the sense that the basic Fed policy is summarized as follows:  “The economic situation continues to fall short of that consistent with the dual mandate, we have the tools to address that deviation, but will take no additional action because some people in the Middle East are seeking democracy.”

Saturday, April 09, 2011

Why Oh Why?

Isn't a intended non-factual statment called a lie?:

'his remark was not intended to be a factual statement,'

This doesn't say Senator Jon Kyl (R-AZ) made a mistake, it says that he was not intending to be factual (even though he was citing a specific figure). With his credibility now seriously in question, this ought to cause news agencies to stop quoting, interviewing, or otherwise paying attention to Senator Kyl. One lie -- especially one that is "intended" as this one seems to be -- should cause reputable news agencies to stay away. But they won't. Providing credible information to the public does not seem to be the first order of business. [Update: I should add that I realize he was simply tossing out a figure without bothering to check, he said 90 percent when the truth was closer to 3 percent, so maybe "intended lie" is a bit strong as a description. But why should anyone, e.g. a news agency, be willing to rely upon or report the views of someone who is willing to yank figures out of thin air -- wrong figures it turns out -- to support an argument?]

Saturday, March 05, 2011

"Fox News Will not be Moving into Canada"

The environment North of the U.S. is much less hospitable to some types of Fox-like creatures:

...Fox News will not be moving into Canada after all! The reason: Canada regulators announced last week they would reject efforts by Canada's right wing Prime Minister, Stephen Harper, to repeal a law that forbids lying on broadcast news.
Canada's Radio Act requires that "a licenser may not broadcast....any false or misleading news." The provision has kept Fox News and right wing talk radio out of Canada...

[From here.]

Thursday, March 03, 2011

"Breaking News: Tax Revenues Plummeted"

David Cay Johnston:

Breaking News: Tax Revenues Plummeted, by David Cay Johnston: We take you now to the official data for important news. ... Lowered tax rates did not result in increased tax revenues as promised by politician after pundit after professional economist. And even though this harsh truth has been obvious from the official data for some time, the same politicians and pundits keep prevaricating. ...
No matter how many times advocates of lower tax rates said it, tax rate cuts did not pay for themselves, did not spur economic growth, did not increase jobs, and did not make America better off.
Now that the news has been broken, let's see how many political leaders start speaking facts instead of fairy tales. And let's also watch to see how many Washington reporters, news anchors, talk show guests, and syndicated columnists use the actual figures. It's called holding politicians accountable, and it used to be a mainstay of journalism, where the first rule is to check it out and the second is to cross-check until you know what is going on and can give context. ...

I was going to say, "don't count on it." But then I kept reading:

So how soon will we see Washington journalists holding politicians accountable for what they say about taxes, tax rates, revenues, economic growth, and jobs?
Here's some advice: Don't hold your breath. Washington has become a city of ideological marketing, where those who would note that the emperors have no facts are unwelcome in their own newsrooms. ...[continue reading]...

The claim from conservatives that defict reduction will help the economy recover from the recession is their latest attempt to pursue ideological goals by convincing people that down is really up.


In Search of the Confidence Fairy, by Paul Krugman: In the debate over the budget, Republicans seem to be leaning on the claim that austerity will actually increase employment, because it will raise business confidence; at least that’s what John Taylor seems to be saying.
But how’s that going in Britain, where the Cameron austerity program was supposed to lead the way?
Most of the discussion of Britain I’ve seen focuses on GDP numbers, with the debate then centering on how much of the decline in the 4th quarter was weather-related. But a lot of things affect GDP. Why not look directly at confidence? The BDO has a convenient survey of business optimism (pdf); numbers for December and January here. Here’s what it looks like:


Austerity seems to have hurt, not helped, business confidence; as the BDO says, “Private sector unprepared to fill the hole left by public sector cuts.”
Why do we think the US experience — with the GOP proposals far less serious and responsible than Cameron’s — would be any better?

Tuesday, January 11, 2011

"Media and Political Culture"

Daniel Little:

Media and political culture, Understanding Society: How are people's political beliefs, concerns, and passions influenced within a modern mass society? There are many mechanisms, certainly: family, school, place of worship, place of work, and military service, to name several. But certainly the various channels of the media play an important role. Newspapers, television and radio, social media, and blogs have a manifest ability to focus some parts of the electorate on one issue or another.

So it seems worthwhile to ask whether it is possible to perform some empirical study of the content and value systems associated with various media channels. (Here is a textbook by Klaus Krippendorff on the use of content analysis in journalism and the media; Content Analysis: An Introduction to Its Methodology.) This question falls into several parts: first, are there important differences in content and tone across various media channels? And second, what effects do these configurations of content and tone have on the users of the media?

The Pew Research Center's Project for Excellent Journalism offers a window into the first of these questions with a fascinating new tool (link). The "Year in the News Interactive" tool is the front end of a valuable database that codes various media streams according to content. The database is then searchable so that the user can produce reports on the percentage of the "newshole" devoted to a particular issue or person in a particular medium. Here is a sample of what the tool produces:

This chart repays close examination. It picks out five segments of media -- "All Media," "Large Papers," Talk Radio," "NBC Evening News," and "Fox News," and it compares these outlets with respect to five issues: Obama Administration, Health Care, Tea Party, Mosque Controversy, and Sarah Palin. These are highly politicized issues, so it is interesting to see how the patterns of treatment differ across different segments of the media.

If we consider "All Media" as a benchmark -- representing the average amount of attention given by the media as a whole to various issues -- we see that Talk Radio and Fox News show a few remarkable patterns. Both sources give the mosque controversy more than twice the percentage of the newshole; likewise the Tea Party gets twice as much attention with Talk Radio and Fox News as with All Media. Fox News gives Sarah Palin over twice the exposure she gets from All Media -- and nine times the exposure she gets from Large Papers. Both Talk Radio and Fox News give an inordinate amount of air time to Health Care and the Obama Administration.

Now take a different cut: the network news programs and Fox News with respect to a much less political list of topics -- BP Oil Spill, Haiti Earthquake, Toyota Accelerator Recall, and Cyberspace.

Here the main contrast that seems evident is that Fox News devotes significantly less time to the non-political issues. Fox devoted about half the percentage of its newshole to the BP Oil Spill compared to NBC news; Haiti got roughly a third the amount attention on Fox; and the Toyota Accelerator Recall got less than half the exposure as it received on NBC news.

At a minimum, this shows something pretty interesting: the regular viewer or listener to Fox News and Talk Radio will get a very different view of the world from the person exposed to All Media or Large Papers. These media channels give an inordinate amount of airtime to "hot button" issues that have the potential of inflaming their viewers. And these channels spend much less time that the other media on non-political issues -- Haiti, Toyota recall, or Cyberspace.

What would be particularly interesting in today's environment is an additional dimension of content analysis, reflecting antagonism, intolerance, and hostility. It would be very useful to have a few years of data on the percentage of the newshole devoted to incendiary reporting about issues, individuals, and the government. Many observers have the definite impression that this kind of language has increased dramatically; it would be very useful to have quantifiable data on this topic.

(As we think about the tenor and extremism of some of the voices in political media today, it is sobering to remember the role that "hate radio" played in the Rwandan genocide; link.)

Sunday, November 14, 2010

"The Case Against News We Can Choose"

Ted Koppel misses "Walter Cronkite, Chet Huntley, David Brinkley, Frank Reynolds and Howard K. Smith" and their "relatively unbiased accounts of information that their respective news organizations believed the public needed to know":

The case against news we can choose, by Ted Koppel, Commentary, Washington Post: To witness Keith Olbermann ... suspended even briefly last week for making financial contributions to Democratic political candidates seemed like a whimsical, arcane holdover from a long-gone era of television journalism... Back then, a policy against political contributions would have aimed to avoid even the appearance of partisanship. ...
We live now in a cable news universe that celebrates the opinions of Olbermann, Rachel Maddow, Chris Matthews, Glenn Beck, Sean Hannity and Bill O'Reilly - ...political partisanship ... encouraged ... by their parent organizations because their brand of analysis and commentary is highly profitable.
The commercial success of both Fox News and MSNBC is a source of nonpartisan sadness for me. While I can appreciate the financial logic of drowning television viewers in a flood of opinions designed to confirm their own biases, the trend is not good for the republic. ... This is to journalism what Bernie Madoff was to investment: He told his customers what they wanted to hear, and by the time they learned the truth, their money was gone. ...
We celebrate truth as a virtue, but only in the abstract. What we really need in our search for truth is a commodity that used to be at the heart of good journalism: facts - along with a willingness to present those facts without fear or favor.
To the degree that broadcast news was a more virtuous operation 40 years ago, it was a function of both fear and innocence. Network executives were afraid that a failure to work in the "public interest, convenience and necessity," as set forth in the Radio Act of 1927, might cause the Federal Communications Commission to suspend or even revoke their licenses. ... News was ... the loss leader that permitted NBC, CBS and ABC to justify the enormous profits made by their entertainment divisions.
On the innocence side of the ledger, meanwhile, it never occurred to the network brass that news programming could be profitable. ...
Much of the American public used to gather before the electronic hearth every evening, separate but together, while Walter Cronkite, Chet Huntley, David Brinkley, Frank Reynolds and Howard K. Smith offered relatively unbiased accounts of information that their respective news organizations believed the public needed to know. The ritual permitted, and perhaps encouraged, shared perceptions and even the possibility of compromise among those who disagreed.
It was an imperfect, untidy little Eden of journalism where reporters were motivated to gather facts about important issues. We didn't know that we could become profit centers. No one had bitten into that apple yet.
The transition of news from a public service to a profitable commodity is irreversible. Legions of new media present a vista of unrelenting competition. ...
The need for clear, objective reporting in a world of rising religious fundamentalism, economic interdependence and global ecological problems is probably greater than it has ever been. But we are no longer a national audience receiving news from a handful of trusted gatekeepers; we're now a million or more clusters of consumers, harvesting information from like-minded providers. ...
There is ... not much of a chance that 21st-century journalism will be adapted to conform with the old rules. Technology and the market are offering a tantalizing array of channels, each designed to fill a particular niche - sports, weather, cooking, religion - and an infinite variety of news, prepared and seasoned to reflect our taste, just the way we like it. As someone used to say in a bygone era, "That's the way it is."

I have mixed feelings about this. When the networks and other media are trying to be objective but get the facts wrong, as they do, there is now a way to challenge the statements that did not exist 40 years ago when three networks had a monopoly on public discourse. If all three networks said it, then it was true. So the good part is that "facts" that really aren't facts can be challenged in a way that didn't happen 40 years ago. And there is another good part too. Sometimes there are legitimate differences in the way a set of facts can be interpreted. These differences are aired today in ways they weren't in the past when only one side of the argument might have made it onto the networks.

The bad part is that actual facts can also be challenged in an attempt to divert attention and create smoke screens that obscure the truth. And it seems to me that the cost -- the deliberate attempt to undercut truth for political advantage -- has more than outweighed the benefit of being able to challenge information presented as factual when it isn't, or presented as representative of the conclusions drawn from most scientific work on an issue when the conclusions actually point in another direction.

I don't have the answer to this either, but since Koppel emphasizes the bad in the new system without noting much of the good, I thought I'd at least point out that some parts of the new system are better than the old. I don't want to go back to system with three white guys on networks with a monopoly on the news tell me the "truth." More competition than that is good, the problem is that the competition leads networks to maximize entertainment rather the provision of accurate information. Thus the need, it seems to me, is to find a way to enhance the good parts the new system while minimizing the bad. Part of that, I think, will come as people adapt to the new information technology we now have -- we are still in transition and still learning how to best use the new tools. But that's unlikely to be enough, and it won't solve the problem of people only seeking out the things they want to hear, and so called news sources meeting the demand for one-sided presentations. The harder question is whether some sort of government intervention is needed to give the news media the incentive it needs to present the facts "without fear a favor." I think a case can be made that it is in the public interest to have such information available, but beyond truth in advertising rules about what can and cannot be labeled news, and subsidies of some sort to encourage movement in this direction (but how to design these?), it's hard for me to think of ways to make this happen that aren't overly restrictive. Any ideas?

Sunday, October 31, 2010

"David Broder Calls for War With Iran to Boost the Economy"

I don't know if I can muster the shrillness this deserves, so let me turn it over to Dean Baker and Brad DeLong. Brad DeLong first:

There Should Be Resignations in Protest and on Principle from the Washington Post Today..., by Brad DeLong: ...but there should be such resignations every day. ...

David Broder... call[s] for Barack Obama to bomb Iran to get the economy moving? It would be good for the country if this monstrosity shut itself down today. ... Broder is ... monstrous:

[I]f Obama cannot spur that [economic] growth by 2012, he is unlikely to be reelected.... Can Obama harness the forces that might spur new growth?.... What are those forces?... One is the power of the business cycle.... What else might affect the economy? The answer is obvious, but its implications are frightening. War and peace influence the economy.

Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II.

Here is where Obama is likely to prevail.... [H]e can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve.

I am not suggesting, of course, that the president incite a war to get reelected. But the nation will rally around Obama because Iran is the greatest threat to the world in the young century. If he can confront this threat and contain Iran's nuclear ambitions, he will have made the world safer and may be regarded as one of the most successful presidents in history.

Dean Baker:

David Broder Calls for War With Iran to Boost the Economy, by Dean Baker: This is not a joke (at least not on my part). David Broder, the longtime columnist and reporter at a formerly respectable newspaper, quite explicitly suggested that fighting a war with Iran could be an effective way to boost the economy. Ignoring the idea that anyone should undertake war as an economic policy, Broder's economics is also a visit to loon tune land. ...
Sorry Mr. Broder, outside of Fox on 15th the world does not work this way. War affects the economy the same way that other government spending affects the economy. ...
If spending on war can provide jobs and lift the economy then so can spending on roads, weatherizing homes, or educating our kids. Yes, that's right, all the forms of stimulus spending that Broder derided so much because they add to the deficit will increase GDP and generate jobs just like the war that Broder is advocating (which will also add to the deficit).
So, we have two routes to prosperity. We can either build up our physical infrastructure and improve the skills and education of our workers or we can go kill Iranians. Broder has made it clear where he stands.

Even they aren't shrill enough for my taste. Trying to sell a war by pointing to positive economic and political externalities is pretty disgusting, especially when the same economic benefits and then some can be realized by spending the money on infrastructure instead. Killing Iranians and Americans is not required. (And even if there was some way to justify going to war to spur the economy, the spike in oil prices that would surely occur would likely make things worse, not better.)

How about a war on joblessness? Had that war been conducted with the support of people like Broder, or without for that matter, the economy would be doing better, and Democrats would be doing better in the polls. I'm convinced of that. But the Broders of the world, the "serious people," aren't so serious when it comes to ordinary households struggling to make ends meet. Where's the support for their struggles? Why aren't they worth spending money on? Grrr.

Wednesday, September 08, 2010

"John Boehner's Stale 'Two-Step Job Creation Plan"

On Boehner's economic "plan," pgl sets the tone:

CNNMoney Fails Introductory Macro. by pgl: OK – I just ripped off the title of Peter Dorman’s ripping of Peter Orszag’s NYTimes oped but how else can you describe the CNN/Money piece entitled Boehner unveils his own plan to aid economy?. Boehner and other GOP leaders propose to cut government spending which would deepen the recession. How can any reporter say this is an aid to the economy? Could at least one reporter have the intelligence and integrity to entitle such a piece Boehner unveils his own plan to screw economy? If you any decent reporting on such GOP gibberish – let us know.

And Ezra Klein has backup:

John Boehner's stale 'two-step job creation plan', by Ezra Klein: Minority Leader John Boehner is proposing what his members are calling a "two-step job creation plan." The two steps? Pass a budget that costs only as much as the 2008 budget, and extend the Bush tax cuts for everyone, including the wealthiest Americans.
So on the one hand, a measure that will make a small dent in the deficit. On the other hand, a measure that will lead to a huge increase in the deficit. There's no theory of the economy in which this really makes sense: If the market is worried about the government's finances, this makes them worse, not better. ...
It's also worth noting that these policies are both stale: The Bush tax cuts are ... tax policy from 10 years ago, designed to deal with a very different set of circumstances. ... Our economic situation has changed dramatically in the past few years. Don't Republicans have any fresh thinking on what to do about it?

I thought Ezra's wonk book made the salient point:

...many Republicans, at the same time that they are claiming that a $50 billion investment in America’s infrastructure is a budget-buster, are pushing to extend the Bush tax cuts for the wealthiest two percent of Americans. ...

And the cost of those tax cuts is much, much higher than the cost of the infrastructure proposal. On the other side -- i.e. the benefits -- given our infrastructure needs, which are nearly universally acknowledged to be large, the benefits from infrastructure spending would be similarly large. As Paul Krugman argues, the benefits from infrastructure spending are likely to exceed the benefits from extending the tax cuts:

So suppose we’re going to put $50 billion of resources that would otherwise be idle to work. Is it better to use them to produce public goods like improved roads, or private goods like more consumer durables? That’s not at all obvious — and anyone who tells you that basic economics settles the question, that is says that devoting more resources to production of private goods is better, doesn’t understand Econ 101.

And there’s a pretty good argument to be made that we are, in fact, starved for public goods in this country, so that it would actually be a good idea to shift some resources to public goods production even if we were at full employment; in that case, we should definitely give priority to public goods when trying to put unemployed resources to work.

Would we be better or worse off today if the Bush tax cuts at the upper end of the income distribution had been used instead for a decade long program to rebuild infrastructure? My answer won't be hard to guess.

Tuesday, September 07, 2010

"He is One of the Best Fed Watchers Out There"

I figured Tim Duy would be too shy to post this, so I posted it for him.