Category Archives: Economics

Why Listening to TV Commentary Might Drive a Person Crazy

Posted on by

Today’s big story was that the nation’s official unemployment rate dropped to 7.8%. This is good news if you want the economy to improve.

Of course, it’s well-known that the unemployment rate calculated by the Bureau of Labor Statistics isn’t precise. It’s a statistical approximation based on various kinds of data. But the official rate does generally indicate whether unemployment is going up or down and roughly how many people are out of work.

Lately, when the number has been bad, Republicans have used this as evidence against the Democrats. Today, when the number was good, Republicans loudly suggested that the Obama administration somehow manipulated the number to its advantage. Right. When you like a number, it’s accurate. When you don’t, it’s phony. This behavior is so clearly hypocritical and self-serving that it’s hardly worth pointing out.

Unfortunately, I happened to switch to a cable news station today while the TV’s sound was on. What I immediately heard was this remark from one of the panelists: “I’m not smart enough to speculate on whether the number is accurate or not”.

Well, you’re apparently smart enough to be on TV. Shouldn’t you be smart enough to know that there is no reason to speculate at all? The unemployment rate is calculated by civil servants. There has never been any evidence that politicians have manipulated the official unemployment rate to their advantage. Isn’t it obvious that the Republicans are questioning the number this time because it’s bad news for them? Isn’t it obvious that people in the media were manipulated into speculating about the number’s accuracy in order to cast doubt in some voter’s minds about the economy and thereby affect the election? 

If you’re going to offer your opinions on television, you should at least be smart enough to know when to speculate and when not to.

Growth Through Shrinkage

Posted on by

Staples, the office supply chain, has announced that it will close 30 stores in the US and 45 stores in Europe. It will also reduce its retail square footage in North America by 15%.

The purpose of this move is to “accelerate growth”.

That’s one of the remarkable things about corporations: they foster language in which black is white and up is down.

http://money.cnn.com/2012/09/25/news/companies/staples-store-closings/

The Background to What Romney Said

Posted on by

Ezra Klein of the Washington Post responds to Romney’s remarks:

“83 percent of those not paying federal income taxes are either working and paying payroll taxes or they’re elderly and Romney is promising to protect their benefits. The remainder, by and large, aren’t paying federal income or payroll taxes because they’re unemployed.”

And why don’t many working people end up owing Federal income tax?

“Part of the reason so many Americans don’t pay federal income taxes is that Republicans have passed a series of very large tax cuts that wiped out the income-tax liability for many Americans. That’s why, when you look at graphs of the percent of Americans who don’t pay income taxes, you see huge jumps after Ronald Reagan’s 1986 tax reform and George W. Bush’s 2001 and 2003 tax cuts. So whenever you hear that half of Americans don’t pay federal income taxes, remember: Ronald Reagan and George W. Bush helped build that.”

Klein points out that some of the tax cuts for lower income people were adopted to make tax cuts for higher income people more politically acceptable. Now, however, the Republicans are arguing that people who don’t owe federal income tax are parasites who don’t deserve government benefits:

“Republicans have become outraged over the predictable effect of tax cuts they passed and are using that outrage as the justification for an agenda that further cuts taxes on the rich and pays for it by cutting social services for the non-rich.”

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/17/romneys-theory-of-the-taker-class-and-why-it-matters/

Electrocardiograms ‘R Us

Posted on by

I saw my primary care doctor last week. She decided that I needed an EKG. She also personally called my cardiologist’s office and got me an appointment the following day.

When I arrived at the cardiologist’s office, the first thing they wanted to do was an EKG. I pointed out that I had just had one yesterday. The nurse went away, presumably to get a fax of my EKG from my other doctor.

Unfortunately, that’s not what happened. My cardiologist ordered her own EKG.

Both EKG’s were normal. Our insurance company will be billed for two tests, one of which wasn’t necessary.

Paul Krugman points out that the US and Canada used to spend about the same amount on health care, but we don’t anymore. Our system, supposedly based on free market competition (and as many EKG’s as possible?), now costs more than Canada’s, even though the Canadian single-payer system gets better results and Canadians are happy with the health care they receive.

http://krugman.blogs.nytimes.com/2012/08/31/health-systems-and-health-costs/

Do You Want Fries With That?

Posted on by

Most of the jobs lost during the Great Recession paid relatively decent wages. Most of the jobs added since then pay low wages.

From a report by the National Employment Law Project:

We find that three low-wage industries (food services, retail, and employment services) added 1.7 million jobs over the past two years, fully 43 percent of net employment growth. At the same time, better-paying industries (like construction; manufacturing; finance, insurance and real estate; and information) did not grow, or did not grow enough to make up for recession losses. Other better-paying industries (like professional and technical services) saw solid growth, but not in their mid-wage occupations. And steep cuts in state and local government have hit mid- and higher-wage occupations the hardest.

http://www.nelp.org/index.php/content/content_about_us/tracking_the_recovery