Relevant and even prescient commentary on news, politics and the economy.


by Sandwichman


Repeat after me: The world is not a zero-sum game. Technology often creates more jobs than it destroys. The number of jobs in the economy depends on how much people are spending and investing. High-skilled tech workers grow the economic pie by boosting productivity, encouraging more investment and increasing entrepreneurship. Economists call this “the lump of labor” fallacy.

Jennifer Rubin, WaPo

Trump and right-wingers who have never heard of the lump-of-labor fallacy seek to construct a false narrative to explain real hardship caused by a whole variety of issues, including automation, a skills mismatch and education inadequacy. We would hope the poll is a positive sign that Americans grasp that “the world is not a zero-sum game where natives must lose out in order for immigrants to gain — or vice versa.”

Isabel Sawhill, Brookings Institute

One problem is that when people look at the labor market, they often come to the wrong conclusion. They see well-paid jobs in manufacturing or elsewhere disappearing. They conclude that there are simply not enough jobs to employ everyone who wants to work. Their implicit view of the world is that there are a fixed number of jobs and that it will be impossible to supply everyone with a reasonable livelihood. Economists call this “the lump of labor” fallacy. This way of thinking is a fallacy because the number of jobs in the economy depends on how much people are spending and investing, that is on the total demand for goods and services.

Comments (8) | |

Dancin With the Stars or “Why is there an Exemption for Representatives, Senators, and Washington staff?

After being confronted by TPM reporter Alice Ollstein about the exemption for Washington elected officials and their staff, it was obvious they were caught off guard. Read some of the answers dancing around the issue.

New Jersey Republican Representative Tom MacArthur who proposed an amendment allowing states to opt out of key PPACA requirements. Read what he and other Republican House Representatives had to say when they were asked about the exempt to the latest AHCA amendment I had writen about.

Rep. Tom MacArthur (R-NJ); he is working to fix the language in question.

Rep. MacArthur puts out statement saying Congress shouldn’t get special treatment, they are working to fix exemption.

Rep. Scott Desjarleis (R-TN); “I don’t know about that. That’s a good question,”

Rep. Morgan Griffith (R-VA).; “I’ll have to read the language more closely,”

Rep. Chris Collins (R-NY); “I didn’t know there was [an exemption for members of Congress]. I don’t know what you’re talking about,”

Rep. Mark Meadows (R-NC), ” because D.C. is not a state, it can not apply for or receive the same waivers states can under their bill.”

Rep. David Brat (R-VA) “an exemption for members of Congress seeking to deregulate the health care market “would be, politically, completely tone deaf.”

Other Republicans: “the carve-out would have to be addressed with a new piece of legislation for complicated parliamentary reasons. A senior leadership staff member confirmed that they are working on a ‘stand-alone effort’ to undo the exemption, which lawmakers would vote on at the same time as the larger health care package.

Freedom Caucasus member Rep. Morgan Griffith (R-VA): “the fix has to come through a separate bill. Did not know whether D.C. could get the same waivers as a state under the legislation; but, Griffith said it did not matter because ‘liberal’ D.C. wouldn’t seek a waiver in the first place.

Republican lawmakers and staff: it was inserted in the first place in order to ensure that it could pass the Senate under what is known as the Byrd Rule, though they did not fully explain why.

The Byrd Rule dictates that strict budgetary legislation that does not increase the federal deficit after 10 years can be fast-tracked through the Senate on a simple majority vote.

Rep. Kevin Brady (R-TX); the Byrd Rule was ‘the genesis’ of the exemption provision, but promised that “every member of Congress is going to vote to make sure we are treated like everybody else.”

Again Rep. Mark Meadows (R-NC): It was a provision that, from a fatal standpoint, would not allow us to address it because jurisdictionally on the budget reconciliation instructions, that were narrowly tailored to two different committees of jurisdiction. To fully address that would had to have gone over to another area which would have made it fatal.” huh?

And the truth?
Health care law expert and professor at Washington and Lee University, Tim Jost: “D.C. is clearly defined as a state in the Affordable Care Act. And I don’t see anything in the AHCA that changes that, including this provision,” he said. “The provision provides for congressional coverage through the marketplace, and the language is clear [regarding the exemption].”

I think most of these reps are residents of the state they represent in Congress, so why wouldn’t they be exempt from the exclusion as defined by the amendment?

Tags: Comments (6) | |

Congressional Republicans looking Out for Your Health, Healthcare Insurance, and Their’s Too . . .

One Happy Republican House Representative
invisible hand If you have not been paying attention, it looks like the Republicans are getting ready again to submit another version of a PPACA/ACA repeal bill. New Jersey Republican Representative Tom MacArthur is proposing an amendment allowing states to opt out of key PPACA requirements. For example:

– Preventative Care: The PPACA has 62 preventative measures or Essential Preventive Care benefits which are no cost to a patient. Cholesterol screening, Type 2 Diabetes screening various immunizations for adults and children, breast cancer screenings, hepatitis B screenings, HIV tests, lead screening for children, etc.

Community Rating: In the good old days when people had a heart attack , disorder, or illness; insurance companies would rate the individual and either insure them at a much higher rate or deny insurance to them. The PPACA acting like a true insurance pool spread the risk amongst the community adapting a more uniform rate for people. Two exceptions were smoking at 150% of the lowest cost individual and 300% for older people (Republicans wish to increase this to 500%). Where people with pre-existing conditions had to pay much higher rates or had no insurance, the PPACA established rates covering them and spreading the cost.

This new GOP amendment allows states to waive community rating. Insurers could again charge people based on their health and expected health care costs. The state would have to participate in the Patient and State Stability Fund (which would be underfunded) before it could waive out of Community Rating. The PSS is a pool of money in the AHCA that states can use to set up high-risk pools or shore up insurers that get stuck with really expensive patients (think of Corridor Risk and Reissuance programs which Republicans defunded).

Initially, the AHCA as proposed by Republicans would have resulted in an estimated 24 million people becoming uninsured over 10 years with a loss of 14 million in one year. We would be back to pre-PPACA with no single payer, universal, public option, Medicare-for-all in sight. The change in the Community Rating would target those with severe illness or disorders, the elderly, and those with pre-existing conditions. Removing the Preventative Care portion of the PPACA targets women and children and again patients would have to pay for them. There is just the healthy left or healthy today and the rest of the populations gets to fend for themselves. That would certainly lower healthcare insurance costs until the healthcare industry sucked it up in increasing prices. Not quite sure who the Republicans are tossing a bone to with this amendment, the healthcare industry or healthcare insurance companies?

As Vox’s Sarah Kliff points out; when the PPACA came into play, all Representatives and staffers had to purchase healthcare insurance on the individuals exchange. What was good for the gander was also good for the goose so to speak. I seem to remember differently; but, let’s go with this for now. There was quite a bit of grumbling going on in Congress when this was proposed.

invisible hand Fast forward to today’s amendment by New Jersey Republican Representative Tom MacArthur; it appears Congress now likes the PPACA when it comes to their healthcare insurance. If Representatives and staffers live in one of those states waiving out of Preventative Care and Community Ratings, Congress is exempt from the wavier. Looking at section 1312(d)(3)(D) of the amendment (sixth page) there is an exemption for those who will not be included in a state’s waiver. Senators, House Representative, their staffers and I am sure every other staffer in Washington, the Cabinet and their staffers, Bannon, etc. are all excluded from any state wavier on healthcare. I am glad they are looking out for us and the people who vote for them.

Tags: Comments (0) | |

The real world

Via Diane Ravitch’s`blog comes this bit of news…the real world is business is a meme underlying our conversations in politics.

Well, this is good news!

Ohio Governor John Kasich’s proposal that teachers should be required to “job shadow” a business to learn about “the real world” has been shot down (thanks to Ohio Algebra Teacher for sharing!).

Democrats’ counterproposal that Kasich be required to spend 40 hours annually job shadowing people who work in public schools. That won’t pass either, but it was a nice response.

Comments (0) | |

A thought for Sunday: the economy is on autopilot. Pray that it stays that way

by New Deal democrat

A thought for Sunday: the economy is on autopilot. Pray that it stays that way

It’s Sunday, so I get to step out from nerdy analysis, and opine as I please.

Back in 2014, when there was another GOP “wave” election in the Congress, I wrote that the silver lining was that we were at the best point in the economic cycle for it to function on autopilot for the next 24 months. In other words, almost all of the long term indicators were positive, so if all the Congress did in 2015-16 was agree to continue to pay the country’s bills, we would probably be OK.  And we were.

So, a little over 3 months into the Trump Administration, what action has it taken to materially change the economic trajectory?

Basically, nothing. Yes, a bunch of executive orders have been signed promising to undo Obama regulations, and the telecoms have gotten the right to sell all of your data, but in terms of actual action, the economy is still on autopilot.

Comments (20) | |

Waldmann Vs Waldman (finally)

I am generally very very impressed by Paul Waldman at the Plum line blog (for one thing I admire the lack of Ego he demonstrates by writing for a blog subtitled “Greg Sargent’s take from a liberal perspective). Waldman is reliably brilliant (so is Sargent).

Now finally I find something he wrote with which I disagree. In the generally excellent “President Trump Appoints Tax Fairy to Key Economic Post” Waldman wrote

The point isn’t that tax increases help the economy and tax cuts hurt it, but rather that tweaking the tax code has very little effect at all. You might get a modest economic bump from tax cuts, but it won’t ever create enough growth to pay for them, as Republicans always insist their next tax cut will do. Democratic economists know this, which is why they don’t think changing the tax code — even in a progressive direction — is a particularly urgent priority.

He is demonstrably wrong. I am a Democratic economist and I think that changing the tax code in a progressive direction is a particularly urgent priority.

I think this is just a case of sloppy writing (yeah I know, look who’s typing). By “economists” Waldman means “economists thinking about GDP growth”. This is unfair to economists. Very few of us are obsessed with GDP and, I think, almost none of us are sincerely indifferent to the distrubution of national income (I am guessing that people who claim they are do so because they know their view that the rich should be richer is unpopular).

Many economists who work in public finance are obsessed with the income distribution and, obviously consider changing the tax code their life’s work. There are excellent reasons to suspect that a more progressive tax code would cause dramatically higher welfare.

I have another objection (after the jump)

Comments (2) | |

Tax Justice Network Taxcast, March 2017: Brexit and Tax Havens; Losses to Tax Avoidance

by Kenneth Thomas

Tax Justice Network Taxcast, March 2017: Brexit and Tax Havens; Losses to Tax Avoidance
Will Brexit harm the City of London’s tax haven? With weak regulation, money laundering, and satellites like BVI, Cayman Islands, and Jersey, everyone knows it’s already a tax haven. The UK is threatening to be more of a tax haven if they don’t get their way on other issues in the Brexit negotiations, but the EU will be vigilant on this issue, in John Christensen’s opinion. He notes that the General Agreement on Trade in Services (GATS) does not guarantee trade in most financial services. He says UK suffers from finance curse (like the resource curse increasingly studied in political science). He predicts that the EU will find it easier to regulate financial services after the UK is gone.

The cost of the financial crisis was $6.5-$14.5 trillion, according to calculations by Gerald Epstein, of the University of Massachusetts, Amherst. The bailout enabled finance to make profits far beyond what was justified based on the risk banks took on prior to the bailout. Economic rent has been generated through excess compensation, drawing more top graduates into the sector. Private credit/GDP over 90% or so leads to lower economic growth. The U.S., UK, and Iceland all had been at 200% of GDP.

Overcharged? The High Cost of High Finance” is the name of the report.

Listen to the entire broadcast here.

Comments (2) | |

7 Islands and 3 Branches

Jeff Sessions said “I really am amazed that a judge sitting on an island in the Pacific can issue an order that stops the President of the United States from what appears to be clearly his statutory and constitutional power,”

There has been considerable discussion of the phrase “an island in the Pacific”. With that phrase, Sessions made it clear that he considers Hawaii to be a second class state — not a real American state like Alabama. I have no doubt at all that he believes this largely because a majority of residents of Hawaii aren’t white. Our Attorney General is deeply racist and only sometimes able to hide this fact.

A Justice Department spokesperson added insult to insult by saying that Hawaii is indeed an island in the Pacific. This is true. Also Bora Bora is an Island in the Pacific. But Judge Watson didn’t issue his order while sitting on Bora Bora or the Island called Hawaii. he was sitting on Oahu, not Hawaii. The US State of Hawaii is an archipelago including 7 large islands only one of which is the island called “Hawaii” in the Pacific.

Sessions personally displayed spectacular geographic ignorance saying “I wasn’t diminishing the judge or the island of Hawaii, that beautiful place, give me a break.”

None of this is very important. What is important is that Sessions challenges the authority of a judge to declare an executive order to be unlawful. ““I was just making the point that’s very real: one judge out of 700 has stopped the President of the United States from doing what he believes is necessary to protect our safety and security.” Sessions has abandoned his claim that his view of what appears statutory and constitutional should count for more than a judges — that an attorney should be able to over rule a judge. Now he claims that the President’s judgement should count more than any (single) judges view of what the law says.

Judicial proceedings start with a single judge (whose judgments can be appealed). Plaintiffs do not have direct access to panels of judges. As noted by Hobbes roughly 370 years ago, the law without a judge amounts to mere ink on paper. Sessions’ clearly stated view is that the President should not be subordinate to any law or statute whatsoever. If no single judge can even temporarily stop him, the law can’t stop him. If no single judge can issue a preliminary injunction or a decision, then no panel of judges can hear the case.

Sessions declares that the USA is, and should be, an absolute monarchy.

He is an enemy of the constitution.

However, he has not committed treason (which requires making war not just declaring it) and has not committed another impeachable offence (he did commit perjury during his confirmation hearings and, of course, should be impeached, convicted, removed from office and, I think, disqualified “to hold and enjoy any Office of honor, Trust or Profit under the United States”).

Comments (24) | |

The Blood of Christ

I recently saw a rather alarming poster advertizing a blood drive


The title is “donate blood and follow your artistic inclinations” which, given the image, I interpreted as “donate blood and faint, so that you are inclined head down just like the recently crucified Christ. You will be resurrected too (by some fluids not the holy spirit).”

Oddly, it seems the advertizing agency didn’t notice the potentially alarming relationship between the image and a (rather rare) side effect of blood donation. They also didn’t consider the literal meaning of “inclinazione” when writing about an extremely inclined figure.

Closer reading reveals that The One True Catholic and Apostolic Church is, in a sense, paying for blood. “Donors” receive discounts on tickets to the vatican museums.

This raises an issue related to economic theory and justifies an AngryBear post. “Tranfused Blood, Serum Hepatitis, and the Coase Theorem” is a fundamentally important article about market failure in the presence of asymmetric information. The authors noted that it is much cheaper to buy blood than to convince people to give it. But the bought blood isn’t as good, being more likely to contain hepatitis virus. The point is that if someone gives with the intent to help, they care about the quality of their gift, and follow instructions to not donate if, for example, they self inject drugs. People who sell include many who care only about the money. Since the donor (or seller) knows more about the donor’s behavior and risk of hepatitis infection than the blood collectors, the market fails.

This is a really important article (or an early cite of an earlier really important article — Google Scholar gets weak going back to 1974).

But, it seems to me, that the One True Catholic and Apostolic Church has found a trick — a way to pay and select. The point is that intravenous drug addicts etc may be desperate for money and eager to sell blood for cash, but they are not so desperately eager to get discounts on tickets to art museums to be willing to lie and endager others to get them. Even the relatively art loving heroin addict will probably want to save the money rather than buy even discounted tickets to an art museum.

So paying with a “merit good” (don’t ask me to define or even type without scare quotes) can be a rational strategy to use the market even in this case of asymmetric information.

I do not have a rationale for bringing up crucifixion, when trying to convince people to let other people stick sharp things into them.

Comments (2) | |