That's a cheap shot, but an editor at the NYT was clearly asleep at the wheel when they allowed a graph into the paper showing that the relative price of televisions had fallen by somewhere around 110 percent since 2005. (Actually the base year doesn't look right either, since these look like much longer trends in prices.) The graph appears alongside a mostly good article about how the living standards of the low-income families have not kept pace with the rest of the population.

The article is at least imprecise when it tells readers:

"The same global economic trends that have helped drive down the price of most goods also have limited the well-paying industrial jobs once available to a huge swath of working Americans. And the cost of many services crucial to escaping poverty — including education, health care and child care — has soared."

The factors that have destroyed well-paying industrial jobs were conscious policy, not abstract global trends. The United States has trade policies that were explicitly designed to put our manufacturing workers in direct competition with low-paid workers in places like Mexico, China, and Vietnam. This had the predictable effect of driving down their wages.

We could have put in place a trade policy that made it as easy as possible for smart kids in the developing world to train to U.S. standards and work as doctors, lawyers, dentists and other highly paid professionals in the United States.This would have driven down the pay of these professionals and made items like health care much cheaper in the United States. This was a policy decision, not a global economic trend.

This decision was aggravated by the high dollar policy pursued by the Clinton administration. That led to the soaring trade deficit at the end of the 1990s and into the last decade. This deficit has cost the country millions of relatively high-paying manufacturing jobs.

There is also a policy to run a high unemployment budget. Congress has decided to run budgets that leave millions of people out of work rather than spending enough money to bring the economy close to full employment. As Jared Bernstein and I show in our book, lower rates of unemployment would hugely benefit lower paid workers, not only by increasing their likelihood of finding a job, but also increasing their hours and wages.

In short, the low income of the poor is largely a result of deliberate policy decisions that have made them poorer, not global economic trends.

 

Correction:

I may have missed this the first time, but the chart indicates it is showing percentage point changes relative to a 23 percent overall increase in prices over the period from 2005-2013. This means that an item showing a 10 percentage point drop on this chart would have seen its price increase by 20.7 percent, 2.3 percentage points less than the 23 percent overall price rise. If this is correct, then a 110 percentage point decline in television prices would mean that their prices had fallen by 2.3 percent since 2005.

This may not be the most useful way to convey information. Imagine if the rate of inflation over this period had been near zero, as was the case in Japan. It would have been more standard just to show the percentage change in real prices for each item.

 

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