That's what millions are asking after reading the front page piece in the NYT on the state of the National Health Service in the United Kingdom in the context of upcoming elections there. The piece discusses the widespread public support for the system, but notes some of the issues that have been raised concerning the quality of care in recent years.

It would have been useful to tell readers that the U.K. spends 9.1 percent of its GDP on health care. By comparison, the United States spends 17.1 percent of its GDP on health care. The difference in costs between the U.S. and U.K. comes to $5,900 per person per year, or $23,600 for a family of four. This information should have been included in the piece to give readers a better understanding of the relative efficiency of the two systems.

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  • And 1. The USA is richer so we spend much more than on dollars that they do in the UK. 2. Most other things are cheaper in the USA that in the UK so it is even worse than that. The USA Government should easily be able to cover all USA citizens for what it spends now. My preferred system and why....
  • Guest - Shawn Wilkinson

    I think the health expenditure, public spending is an interesting metric for comparison as well (same as your source). As a percent of GDP, both countries give roughly equal percent (and interestingly, our GDP per capita is ~equal if my napkin math is right). So basically the UK government spends ab...
  • Guest - B

    It's also worth pointing out on the Commonwealth Fund's international comparison of 11 nations' healthcare systems, the UK ranked #1 on every metric of quality of care. The US ranked 5th.
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I apologize to those disgruntled over Beat the Press's new format. I adhere strongly to the view that website makeovers are everywhere and always for the worse. But CEPR had to change its website because the old one was becoming increasingly dysfunctional at the back end. One of the great things about software innovation is that it forces people to upgrade their software simply to preserve compatibility. That was the main motivation for the change.

Being forced to get a new website, we did try to make it as user friendly as possible. There are many kinks that our crew here is still working on and hopefully will get resolved soon. And then those reporters will really have to worry about a beating.

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  • Guest - leofromChicago

    What also might help for viewing on PC monitors is a "max-width: 800px;" for the "container" div.
  • Guest - Bart

    I like the photo at the new top, but the rest is New Cokeish.
  • Guest - Leo from Chicago

    Note, text doesn't enlarge through a 'pinch' on my android phone. This may -- may! -- be due to the fact that the css for paragraphs (known to cognoscenti as 'p') is "font-size: 12px;" -- or in other words, fixed as opposed to something like "font-size: 1em;". Not sure but worth a check.
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Greg Mankiw joined the parade of prominent people saying silly things to help push fast-track trade authority through Congress. He headlined a column:

"Economists actually agree on this point: The Wisdom of Free Trade." 

The piece then goes on to argue for fast-track trade authority to allow for the passage of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP).

It's nice that Mankiw has apparently gotten out his bag of economist's holy water and blessed them both as free trade agreements, but that doesn't make it true. (Hey, I want to have the Congress Gives $1 Trillion to Dean Baker Free Trade Act. As an economist in good standing, Mankiw will have to support this free trade measure.)

The basic story here is a very simple one. There are merits to reducing trade barriers, but traditional trade deals will have winners and losers. If this is hard to understand, imagine that we had a free trade deal in physicians' services so that a flood of foreign doctors cut the pay of doctors by 50 percent (@$125,000 a year on average). This would make most of us winners, since we will pay less for health care, but doctors would be big losers. Most traditional trade deals have this character. So people, including economist people, may reasonably oppose them if they think the losers will be hurt so much that it offsets the gains from the deal. (Yes, we can do redistribution, but that is a children's story. We don't.)

But the key point here is that neither the TPP or TTIP is a traditional trade deal. The formal trade barriers between the parties to these deals are already low, which means there is not much room to lower them further. These deals are mostly about putting in place a business friendly structure of regulation. Some of this business friendly regulation involves increasing barriers in the form of stronger and longer patent and copyright protection. (Yes, that is "protection," as in protectionism.)

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  • Guest - Carlito

    Freedom is absolutely necessary in order to succeed, if we don’t have freedom to trade than we will struggle. I am extremely fortunate that as a Forex trader, I have complete freedom with OctaFX broker, it’s an epic company with having low spread of 0.2 pips, high leverage up to 1.500 and also rebat...
  • Guest - George Balella

    You should address these guys claims;
  • Guest - martman1

    Would a cheaper dollar versus the Yuan (ending of currency manipulation) make the purchase by Americans of Chinese produced products of U.S. chartered multinationals more expensive?..i.e would they be more likely to produce here what they sell here if the currency exchange rate changed enough? I do...
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Glenn Kessler, the Washington Post fact checker, gave four Pinocchios this morning to Ohio Senator Sherrod Brown for for mis-attributing a claim on lost jobs from the trade deficit to George W. Bush. Since I may have played a role in the Pinocchio warranting comments, let me try to clear up some possible confusion on the issue.

At the most basic level there are two different ways to view trade based on two different views of the overall economy. The conventional view is that trade affects the allocation of output (i.e. we produce more of some goods and services and less of others) but has little impact on the overall level of output. This is because the economy is assumed to be at or near full employment. The other view is that trade can have a large impact on employment and output because the economy is often not near full employment. In this case, the size of the trade deficit can make a big difference.

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  • Only few person got amazon gift card codes when they search on internet. And some person buy amazon gift codes because they didn't reach right place to get. This is the place for free amazon gift card codes.
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That's not exactly what Samuelson said, after all a 12 percentage point increase in the income tax would take a lot of money from rich people. Samuelson told readers that increasing the normal retirement age for Social Security by an additional two years between now and 2027 (it is already scheduled to rise to 67) "wouldn’t impose major hardship." Raising the normal retirement age by two years is effectively a 12 percent cut in benefits. (For orientation, the average Social Security benefit is less than $1,300 a month.)

Since Social Security is more than 90 percent of the income for one third of retirees this would be equivalent to almost a 12 percentage increase in the income tax for this group. It's more than half of the income for two-thirds of retirees, which means that Samuelson's proposal would be equivalent to a tax increase more than 6 percentage points for this larger group of seniors. By comparison, the Republicans claimed that President Obama's proposal to raise the marginal tax rate by 4.6 percentage points on the rich would be devastating.

The context is Samuelson's praise for New Jersey Governor Chris Christie's proposal to phase in an increase in the normal retirement age for Social Security to 69, which he proposes to phase in by 2034. Samuelson wants it done immediately. Samuelson also applauds Chrstie's proposal to phase out benefits for seniors with incomes between $80,000 and $200,000. This would have the same incentive effect on these seniors as an increase in the income tax rate of 25 percentage points.

Since it affects relatively few people, and would provide a substantial incentive for evasion and avoidance, this proposal would have little impact on the finances of the program, although it would likely help to undermine political support since it would no longer be a universal program. The cutoff for benefit cuts could also be gradually lowered as the promised savings are not realized. It is also worth noting that the $80,000 cutoff for being wealthy in the context of Social Security cuts, and also Christie's proposal to cut Medicare, is one-fifth of the $400,000 cutoff set for the higher income tax rates put in place in 2013.

But the most striking part of Samuelson's piece is that these cuts to Social Security are supposed to be part of a drive for "generational justice." Samuelson complains that:

"Boomers’ children and grandchildren would pay for these more generous benefits [Social Security and Medicare] while their own future benefits would drop."

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  • The current payroll tax is almost 13%. We could scrap the cap and get more revenue in that way, but at some point in the future there are just not going to be enough workers to keep seniors in clover for retirements lasting 30-40 years. So we need to tax more than payrolls. We need to tax capital, s...
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Those of us who work for progressive think tanks are always happy when one of the better funded centrist outfits replicates our work, since the findings are then more likely to get attention in major news outlets. For this reason, it was great to see that the Robert Rubin funded Hamilton Project had done a short paper analyzing trends in earnings by education level over the last two decades. This piece got written up in the NYT's Upshot section by Neil Irwin.

While the Hamilton Project folks got some things right -- workers without college degrees have been big losers over the last two decades -- they also missed much of the story. Since they only looked at endpoints, they failed to recognize that even workers with college degrees have seen their wages stagnate since the turn of the century.

This makes the technology driving down wages story harder to sell. That story is supposed to mean that there is a shift in demand from less-educated workers to more educated workers. But if even the wages of college grads are falling or stagnant, then it is hard to make a case that there has been a shift in demand towards more educated workers.

They also are somewhat sloppy in discussing globalization as though it is an event that occurred as opposed to a policy of the U.S. government. We have designed our trade agreements to put U.S. manufacturing workers in direct competition with low paid workers in the developing world. The predicted and actual effect of this competition is to drive down the wages of U.S. manufacturing workers and less--educated workers more generally.

However, we have largely left in place the barriers that protect doctors, lawyers, dentists and other highly paid professionals from competition with their lower paid counterparts in the developing world. This was a policy choice, not an inevitable process of globalization.

The focus on endpoints also caused the Hamilton Project folks to miss the sharp upturn in wages for less-educated workers during the low unemployment years of the late 1990s. Our research has found that low rates of unemployment disproportionately benefit those at the bottom end of the wage distribution. We have not returned to the low unemployment of the the late 1990s because of a decision not to have a larger stimulus or to address the problem of an over-valued dollar that is giving us large trade deficits. (Yes, this is directly relevant to the lack of currency rules in the Trans-Pacific Partnership.) As a result, the economy does not have the demand needed to get back to full employment. (If the Federal Reserve Board raises interest rates to slow growth, it also will not help in the effort to get back to full employment.)

In any case, the decision to not have a full employment economy is also a policy choice. In short, it's touching to read the Hamilton Project people's plea that we should see inequality as both an issue of policy and technology, but if they had done more careful research, they would realize they don't have much evidence for the technology portion of their argument.

Did someone in Japan call the Washington Post's news reporting "crappy?" Usually newspapers refrain from name-calling, especially in the news section, but this is the Washington Post, there we find the paper telling us:

"With a rapidly aging society and miserable birth rate, Japan hasn’t been able to replace the people leaving outlying towns and cities as quickly as they’ve departed."

"Miserable" in this context means "low." Given that Japan is a densely populated country, it is not clear why anyone should see it as a bad thing that the country may be less densely populated in the future and contribute less to global warming, but obviously this prospect has the Post upset.

This story, about a school that has lost most of its pupils, could be written about thousands of towns across the United States over the last five decades and certainly many more in the decades ahead. These can be sad stories, but hardly amount to a national crisis. More generally, the demographic horror story that the Post and others like to tell about Japan cannot stand up to simple arithmetic. Even very modest rates of productivity growth will raise living standards by far more than demographic changes could possibly lower them. 

The Washington Post has established itself over many decades as a major mouthpiece of elite opinion. Its editorial pages argue strongly for the interests of the wealthy, with scarcely concealed contempt for people who have to work for a living. (They do support alms for the poor, hence they are okay with programs like food stamps and TANF.) 

This attitude has been shown many times over the years, but perhaps never more clearly than in its editorial on the bailout of General Motors and Chrysler, where it fumed about auto workers who earned $56,650 a year. By contrast, it was an ardent supporter of the Wall Street bailout, which was largely about helping people who make this much money in a day.

In fact, the Post helped to conceal one of the major scams that was used to pass the bailout, the claim that the commercial paper market was shutting down. When people were saying that the economy was at the edge of collapse following the Lehman bankruptcy, the commercial paper market was the most immediate issue.

Many large profitable companies (e.g. Verizon or Boeing) were dependent on issuing commercial paper to meet their monthly bills such as payroll, utility bills, and payments to suppliers. If these companies could not get the credit needed to make these payments, the economy really would collapse. What most of the country, and almost certainly most members of Congress, did not know at the time the bailout was approved was that Ben Bernanke and the Fed single-handedly had the ability to support the commercial paper market. The weekend after Congress approved the TARP, Ben Bernanke announced the creation of the Commercial Paper Funding Facility. Congress would have had a much more informed debate about whether it wanted to save Wall Street if it knew the Fed had this power before it voted, but folks like the Washington Post editorial board didn't want any delays before the Wall Street folks got the money.

The paper must have assumed everyone knew the answer to this question since it didn't bother to put these budget numbers in any context, like expressing them as a share of the total budget. These numbers appeared in an article on the fiscal situations of states this year.

Incredibly, the article threw out numbers for budget shortfalls and gave readers no context whatsoever. While the Post undoubtedly has a well-educated readership, it is not likely that many are familiar with the relative sizes of different state budgets.

The Post's reporter could have taken five minutes to look up these numbers. This would have made it possible to tell readers that Kansas' $1 billion shortfall is a bit more than 4 percent of its $24 billion budget, while Pennsylvania's $1.8 billion gap is a bit more than 1.3 percent of its $130 billion budget.

Is there some reason that a reporter can't spare the few minutes necessary to write these numbers in a way that would make them meaningful to most of the people who read them? Is there some reason that the Post's editors don't demand they put numbers in context rather than writing numbers that are meaningless to almost everyone who reads them?

According to inside reports, the main reason the Washington Post opposes nuclear war is because of its impact on the budget deficit. The paper's never ending obsession with the budget deficit, even as it is clear that we have been suffering from a deficit that is too small, is a testament to the ability of people to ignore reality. 

Ruth Marcus treated us to another example of this obsession when she warned of a restructuring of Medicare payments that comes at the cost of:

"a whopping half-a-trillion dollars over the next 20 years... ."

A bit of context might be helpful here. While none of us will see a half trillion dollars in our lifetime, the federal government will see considerably more than this over the next twenty years.

The Congressional Budget Office projects GDP will be more than $550 trillion over the next two decades, making this whopping sum less than 0.1 percent of GDP over this period. Federal revenue will be roughly $100 trillion so this comes to around half of one percent of projected revenue. That's hardly trivial, but if it's "whopping," then whopping ain't what it used to be.

It is also worth noting that if Ruth Marcus and the Washington Post are really concerned about budget deficits, they could support more expansionary policy from the Fed. In addition to giving millions of workers jobs and tens of millions the bargaining power they need to get pay increases, lower unemployment due to expansionary Fed policy can easily knock $2 trillion off the size of the deficit over the next decade. That's four times "whopping." (It could also support trade policy that reduces health care costs by exposing doctors to international competition and weakens patent protection for drugs.)

Neil Irwin had an interesting Upshot piece that noted polling data showing people do not favor much higher taxes on the rich. It questioned why it was that people were opposed to redistribution even though inequality has become a major national concern.

A major problem with this sort of analysis is that it treats distribution as though it is only a function of tax policy. This is clearly secondary. The upward redistribution of the last 35 years was overwhelmingly the result of government policies that structured the market to favor the wealthy.

For example, trade policy has been quite explicitly designed to put manufacturing workers in direct competition with low-paid workers in the developing world. The predicted and actual effect of this policy is to reduce their wages and also the wages of non-college educated workers more generally. By contrast, doctors and other highly-paid professionals (who comprise much of the one percent) have been largely protected from international competition. The argument for exposing these professionals to competition is the same as the argument for trade more generally: it will lead to lower prices and more economic growth. But because of the political power of these groups, free trade in the services of doctors and other professionals is not even discussed in polite circles.

The Federal Reserve Board has also quite explicitly adopted policies that keep unemployment higher than in the years prior to 1980. Higher rates of unemployment not only deny workers jobs, but they also reduce their bargaining power, thereby preventing them from getting wage increases. The government's labor policies have also been much more hostile to workers over the last three decades, making it far more difficult to form unions. And, the government handed out trillions of dollars in below-market interest rate loans to rescue Wall Street banks and prevent the market from working its magic.

Given a whole set of policies that have redistributed a massive amount of income upward, it is understandable that many people would not trust the government to be taxing the rich to help the poor and middle class. 


Apparently the NYT feels it has to protect Chris Christie from his unpopular proposals. In an article on the Republican presidential candidates, it told readers:

"He [Christie] has not spent as much time in New Hampshire as some other candidates, and he chose to focus on introducing his own policy ideas, like major changes to Social Security, Medicare and Medicaid."

Christie has proposed raising the normal retirement age to 69, which is equivalent to a 12 percent cut in benefits. He would also raise the early retirement age, when people are first eligible for benefits, from 62 to 64. In addition, he would cut benefits for people with income over $80,000 a year and eliminate them altogether for people with incomes over $200,000.

These are very serious cuts to Social Security. The NYT should be reporting what Governor Christie is proposing for Social Security, not using euphemisms to hide the substance of the plan he has put forward.


Note: Numbers corrected, thanks John.

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  • All supplemental medicare insurance plans differ from each and every provider though I heard? Prices are supposed to be standardized.
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The NYT gave us yet another account of how the machines are taking our jobs. This one carries the warning that they are taking the jobs of highly educated workers as well, not just less-educated workers. This story apparently carries lot of appeal among elite types (i.e. people who write for the NYT) even if it has little basis in reality.

We have a very good way to measure the extent to which machines are taking our jobs. It's called "productivity growth." It means the extent to which we can produce more output with the same amount of human labor. If the machines are taking our jobs, productivity growth should be very fast.


It isn't. Productivity growth was very fast in the years from 1947-73. It grew at a pace of roughly 3.0 percent annually. This was a period of strong wage growth and low unemployment. It then fell to around 1.5 percent annually from 1973-1995. There was then a pick-up to close to 3.0 percent annually in the years from 1995 to 2005. (For some technical reasons, like a faster pace of depreciation in the more recent period, the 1947-73 productivity growth was much stronger.) Since 2005 productivity growth has fallen to an average rate of about 1.5 percent. In the last two years it has been under 1.0 percent.

While it is likely that the weak productivity growth is at least partly due to the weak growth of the economy, it is clear that rapid productivity growth is not the cause of weak labor demand. In other words, the machines are only taking our jobs in the NYT, this is not a problem in the economy.

This point matters because if machines our taking our jobs then the problem of high unemployment and stagnant wage growth is a technology story. If the story is not machines then it implies the problem is bad economic policy. For example, bad macroeconomic policy has limited demand, trade policy has been designed to put downward pressure on the wages of middle income workers while protecting highly educated professionals, and the government subsidizes the Wall Street boys and girls with bailouts and tax favors. The evidence supports the policy view but the NYT and other major news outlets continue to promote the technology story anyhow.

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  • Guest - 27chaos

    How about - machines are enabling offshore workers to take our jobs?
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That's the question millions are asking after reading Matthew Yglesias' piece arguing that former Obama political adviser David Plouffe is cashing in the right way by working as a lobbyist for Uber. Matt argues that Plouffe is getting rich by openly arguing for a cause that he believes in. I'm not convinced.

First, Matt argues that if Plouffe thought the incumbent taxi industry was mostly right in its battles with Uber, then he could have gone to work lobbying for them. While this is true, my guess is that the incumbent cab industry would have a hard time coming up with the same sort of paycheck as Uber, a company with a $40 billion market capitalization. I doubt the industry collectively can come close to matching a $40 billion market capitalization. Furthermore, given the difficulties of coordination, it is extremely unlikely that their association would be able to toss around the same sort of cash for lobbyists as Uber even if the incumbents collectively had the same resources.

The other more important reason why I'm not convinced that Plouffe believes that he is on the side of the angels, is that the angels don't have to cheat to make their case. Here I'm referring to the study that Alan Krueger, the former head of Obama's Council of Economic Advisers, did on the pay of Uber drivers. Uber gave Kreuger data on drivers' gross earnings per trip, as well as the number of trips they did per hour. This allowed Krueger to calculate that they grossed on average $6.00 an hour more than the net earnings of drivers for the incumbent cab industry.

What Krueger could not do was make a comparison of net earnings. While there is no way for Uber to know exactly how much it costs its drivers for each mile driven, we do have data on this issue. (The IRS puts the cost at 57 cents per mile.) This means that if we know the length of an average trip, then we could get a pretty good estimate of the net earnings of Uber drivers. (Actually, we would still need to factor in miles driven to and from pick-ups and dropoffs.) 

Unfortunately, Krueger tells us that he didn't have data on average miles per trip. Of course Uber would have very good data on miles per trip. If Kreuger didn't have the data it's because Uber chose not to give it to him. Presumably Uber opted not to share the data on miles per trip because it knew the data would make them look bad. Therefore, it opted to withhold these data from Kreuger so he could not do a full analysis.

Getting back to Plouffe's motives, if he really believed in the virtues of Uber, then he should not have a problem with Uber giving all the data to Kreuger and letting him tell the whole story. The fact that Uber withheld the data indicates that Plouffe and the folks at Uber feel they have something to hide and therefore don't entirely believe in the merits of their case. (I'm assuming that Plouffe was involved in arranging this study.)

So I'm afraid I can't agree with Matt here. My guess is that Plouffe went with the highest bidder.

It's repeal the estate tax season, which means we are hearing all sorts of nonsense about how the tax forces people to sell their family farm or business. It should be self-evident that this is nonsense since no one owes a penny of tax on an estate worth less than $5.4 million. And, just to be clear, this is net of debt. If the "family farm" is worth $10 million, but comes with $5 million in debt, then the net worth is $5 million, meaning the kids get it after paying zero in tax.

But if you still think that families are losing their farms because of the tax, then it's worth going back to an old NYT story by David Cay Johnston. Johnston called the American Farm Bureau, a major lobbyist against the tax, and asked to be put in contact with someone who had lost their farm due to the estate tax. The Farm Bureau could not produce a single family anywhere in the country who had lost their farm as a result of the tax.

In short, families do not lose farms or businesses due to the estate tax. They lose them because the next generation doesn't feel like operating them. This is just one more story that politicians tell in order to justify reducing taxes on the very wealthy. The media should point this fact out.

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The NYT gave Germany's finance minister, Wolfgang Schauble, the opportunity to lay out his government's position on austerity in a column today. I don't have time to go through the piece in detail (there is not much new here), but I will make a couple of points.

First, Schauble touts the reform record of Spain and Ireland, Germany's star pupils. It's worth noting that, rather than being spendthrifts, both countries had budget surpluses before the crisis and had debt to GDP ratios well below Germany's. Nonetheless they are still being forced to pay an enormous cost. The I.M.F. projects that both countries will first exceed their pre-crisis level of per capita income in 2018, that's a performance considerably worse than the United States in the Great Depression. Even then, Spain is still projected to face an unemployment rate of 18.8 percent. Both countries have seen enormous cuts to public services and faced large tax increases. And, these are Schauble's success stories.

The other point concerns the impact of structural problems on growth. In fact, many labor market protections have little or no impact on growth, but even where regulations lead to inefficiencies they do not necessary prevent an economy from having healthy growth. An obvious example is the health care system in the United States, where protections for doctors, drug companies, medical equipment suppliers and other providers may add as much as 8 percentage points of GDP to our health care costs (@$1.4 trillion a year). These distortions obviously slow growth, but they have not prevented the U.S. from having a relatively good economic performance over most of the last four decades.

The same is likely true of many of the distortions that have Schauble upset. Some of these may in fact slow growth in Greece, Spain. and other crisis countries. However, they would not prevent them from having functioning economies, if German did not insist on macroeconomic policies that strangled growth.

Like many other folks connected with the Washington Post, columnist Charles Lane wants to cut Social Security. He used his column today to argue that New Jersey governor Chris Christie and Massachusetts senator Elizabeth Warren want to address the shortfall in Social Security in essentially the same way, but progressives are too dumb to recognize this fact.

"The irony is that the progressive plan and Christie’s plan are equivalent, at least in their very broad financial strokes. Both claim to match Social Security resources and obligations over time, and to accomplish this progressively; that is, with upper-income folks bearing a relatively higher share of the adjustment costs."

While Lane may see Christie’s proposal to means-test Social Security benefits as being essentially the same as Warren’s plan to eliminate the cap on wage income subject to the Social Security tax, the numbers indicate otherwise. Christie has said that he would means-test benefits on people with income above $80,000 with the idea of phasing out all benefits for people with incomes over $200,000. If we assume that these people have benefits of roughly $30,000 a year (this is a bit less than the average benefit projected for a high income earner in 2025), this means that we would be phasing out $30,000 in benefits over an income span of $120,000 (the difference between the $200,000 end point and the $80,000 start point). That is equivalent to a 25 percentage point increase in the marginal tax rate for retirees whose income falls within this band.

Under the Christie plan, retirees with incomes above $200,000 would see no further cuts than those with incomes of $200,000 since they will have already lost all of their Social Security. This means that those with income of $2 million or even $20 million would face the same income loss as those with income of $200,000. Of course his plan also does not affect at all people who are still working and not collecting Social Security.

There is also the issue of taking away a benefit that workers have paid for. After all, we could means-test interest payments on government bonds, but that apparently does not bother either Christie or Lane. In addition, we are likely to see substantial distortions as upper income retirees find ways to hide income (e.g. buy a condo for winter vacations rather than use investment income to pay for a hotel). But such distortions apparently do not matter to Lane and Christie, even though they are likely to substantially reduce the savings from means-testing.

Thomas Edsall presents some interesting polling results in his NYT column indicating less public support for government policies to redistribute income even as the distribution of income is becoming increasingly unequal. He argues that this presents a paradox for Democrats who are concerned about inequality.

Actually the situation is less paradoxical when we consider the possibility that government policies are largely responsible for growing inequality. This is most obvious is with the bailout of the financial industry in 2008. Without the help of the TARP and the Fed, Goldman Sachs, Citigroup, Morgan Stanley, and most of the other Wall Street behemoths would be out of business. This would have drastically reduced the wealth and income of many of the richest people in the country.

The government has also redistributed income upward by supporting an over-valued dollar that has eliminated millions of manufacturing jobs and put downward pressure on the wages of non-college educated workers more generally. In addition, a Federal Reserve Board policy that raises interest rates to keep people from getting jobs any time the labor market gets tight enough to support wage growth has also had the effect of reducing the wages of most workers.

Also our trade policy of selective protectionism, which exposes manufacturing workers to competition with the lowest paid workers in the world, while largely protecting doctors, lawyers, and other highly paid professionals (who comprise much of the one percent), has the effect of redistributing income upward. Similarly, our policy of patent protection redistributes hundreds of billions of dollars a year from ordinary workers to drug companies and other beneficiaries of these government-granted monopolies.

In these areas and others the government has acted to redistribute income upward. A politician who wanted to reduce inequality could focus on having less government action in these areas. That would be consistent with the polls cited by Edsall indicating that the public wanted a smaller role for the government.

The Washington Post has long been completely gung ho for trade deals. Whether this stems from some sort of religious fervor or a desire to help wealthy friends and advertisers is not clear. What is clear is that the paper routinely departs from reality in pushing their trade agenda.

It did this most famously back in 2007 when a lead editorial proclaiming the virtues of NAFTA asserted that Mexico's GDP had quadrupled in the prior 20 years. According to the I.M.F., Mexico's growth was actually just 83 percent over this period.

In keeping with this pattern of cheerleading of trade deals, it ran an article on President Obama's "evolution" on trade that treated his support of the Trans-Pacific Partnership (TPP) as an intellectual journey. It never once suggested that he might be supporting the deal out of a desire to appease powerful business interests. (The piece does note the political pressures to oppose the deal from unions and others who have been harmed by trade.)

Whatever President Obama's personal views on trade, as everyone in Washington knows, presidents are constrained by political forces. (Why can't we have a big stimulus that would restore full employment?) Politicians don't get elected to the presidency or other offices based on their political philosophy; they get elected as a result of gaining the support of powerful interest groups.

There are many powerful business groups that have been directly involved in negotiated the TPP. They are writing rules protecting investment from regulations of different types, ensuring market access for our banks, telecommunications companies and other industries, and increasing the length and strength of patent and copyright protection. (The latter changes are forms of protectionism, which is why it is wrong for this article to describe the TPP as a "free trade" pact.)

It is incredibly irresponsible to not mention the pressure from these business groups to complete the TPP. This pressure will almost certainly have more impact on the Obama administration's trade policy and the votes of Democrats in Congress than President Obama's political philosophy.

That probably should have been the headline of a Politico article [sorry, behind paywall] on a letter signed by 13 former Democratic governors urging Congress to approve fast-track trade authority to facilitate the passage of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP). The most newsworthy aspect of the letter is that the governors apparently do not understand the basic economics of trade.

In the letter the governors tell members of Congress:

"We've seen firsthand the benefits of trade to our communities. Increased exports have been a major component of economic development across all 50 states, adding $760 billion to our economy between 2009 and 2014 -- one-third of our total growth. And this growth has supported 1.8 million new jobs and raised wages (up to 18 percent on average) for real people that we've met -- the manufacturing worker in Kentucky, the computer technician in Massachusetts, the dairy farmer in Wisconsin -- whose jobs are related to exports."

This paragraph implies that the governors don't realize that it is net exports, not exports, that add to growth and employment. To see this distinction, if the manufacturing worker in Kentucky they saw first hand, was producing a part for a car that used to be assembled in Ohio, but is now assembled in Mexico, she would have one of the jobs the governors are attributing to exports. Of course the assembly worker in Ohio has now lost her job, but apparently the Democratic governors don't know about him. This lost job would be picked up if we looked at net exports, since we would subtract the full value of the car when it was imported back from Mexico. 

If the governors had done their arithmetic right, instead of boasting about the $760 billion increase in exports, they would have been complaining about the $140 billion decline in net exports, since imports rose by $890 billion between 2009 and 2014. This means that trade was a drag on growth in the recovery, costing the country jobs and putting downward pressure on wages.

It is extraordinary when people who have held important public positions (one of the signers is former Health and Human Services Secretary Kathleen Sebelius) show themselves to be completely ignorant on such a fundamental policy issue. Politico should have called its readers' attention to these former governors misunderstanding of the way in which trade affects the economy, jobs, and wages.

The Washington Post again pushed for approval of the Trans-Pacific Partnership (TPP) in an editorial urging Congress to pass fast track trade authority. Now wanting to waste time with arguments, it jumps straight to ad hominems:

"To the measure’s far more numerous critics on the left, the TPP is yet another corporation-friendly bargain that will destroy American jobs, as the North American Free Trade Agreement, also passed pursuant to fast-track authority, allegedly did.

"These are old anti-trade arguments that aren’t convincing even before you account for the fact that the TPP is about geopolitics as well as economics."

Yeah, well arithmetic and logic are pretty old too, that's probably why they don't get a friendly reception at the Washington Post. Of course the trade deal is in fact corporation-friendly, since that is primarily who is at the negotiating table. They are taking the opportunity to write rules that they expect will increase their profits.

Many of the rules have nothing to do with trade, but rather limit countries' ability to impose various types of consumer and health safety regulation. In fact, some of the most important parts of the deal are explicitly anti-trade, such as the chapter on intellectual property which will strengthen patent and copyright protections. These monopolies obstruct trade and increase costs.

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