CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press

Beat the Press

 facebook_logo  Subscribe by E-mail  


Real Supporters of the "Free Market" Do Not Believe that Companies Can Pollute Drinking Water With Impunity Print
Monday, 20 January 2014 08:43

A Washington Post article on the issues involved in relationship to the chemical spill in West Virginia identified the Competitiveness Policy Institute as a "free-market think tank" in presenting its views opposing increased regulation of dangerous chemical. This is inaccurate.

Supporters of the free market do not believe that others can damage life and property with impunity. For example, it is not consistent with a free market to think that anyone can dump toxic chemicals on Bill Gates' lawn. Protection of life and property are fundamentals of free market economics.

In this case, it is likely that the company responsible, Freedom Industries, will largely escape responsibility for the damage it caused with its actions since it declared bankruptcy. This means that the victims of the spill were effectively forced to give money to Freedom Industries. This is antithetical to free market principles. A think tank that supports such outcomes should be labeled as a proponent of upward redistribution, not a supporter of free markets.

 

Typo corrected, thanks Dax.

 
NYT Tells Us Where Our Tax Dollars Go Print
Monday, 20 January 2014 08:35

The NYT has a very nice (in substance, not appearance) chart on per person spending on a wide variety of government programs. readers would find that the military budget costs us $1,802 per person, Medicare $1,591, and Head Start $27. I was disappointed not to see TANF mentioned, which I would eyeball at around $55 per person and the Corporation for Public Broadcasting at around $1.50 per person.

Anyhow, it is great to see this chart, but this should be the standard way to express budget numbers, not something special for holidays. This is providing readers with information. Telling readers that we are projected to spend $8.1 trillion on Medicare over the next decade is just a silly fraternity ritual that budget reporters like to do. It is not informing readers.

 
Highly Paid Medical Specialists: Beneficiaries of Protectionism Print
Monday, 20 January 2014 08:30

Actually this excellent piece only talks about the first part of the picture, the outlandish paychecks that many medical specialists receive. Most news outlets are too committed to protectionism to discuss the idea of subjecting our doctors to the same sort of international competition as autoworkers or textile workers.

 
George Will Comes Out Against Freedom of Contract Print
Sunday, 19 January 2014 09:07

George Will took a strong stand against freedom of contract in his column today. Usually freedom of contract is viewed as a pillar of a market economy, but Will apparently objects to this freedom when used by workers.

The specific context is the issue of whether public sector workers can sign a contract that requires all the workers who receive the benefit of union representation to share in the cost of this representation. Under the law, if a union represents a bargaining unit, then it must represent every worker in the unit, regardless of whether the worker supports the union or not. This means that the union not only secures the same wages and benefits for all workers in the unit, it also must represent all workers in any grievance or disciplinary action taken by the employer, even if a specific worker does not support the union.

Since the law requires unions to represent all workers, they have often sought contracts that require all the workers in a bargaining unit to pay a fee to cover the cost of this representation, even though they still have the option not to join the union. It is this contract requirement that draws Will's ire, claiming that it violates the first amendment rights of workers who do not support the union.

It is worth putting Will's complaint here in a larger context. If a worker is employed by Koch Industries, Will would certainly argue that the Koch brothers could take the gains from their stock in the company and use it for supporting right-wing political candidates or whatever purpose they want. He would even argue that the company could directly spend its profits on supporting right-wing candidates, as allowed under the Citizens United Supreme Court ruling. In fact, he would say that Koch could require the worker to attend a right-wing rally and yell support for their causes as a condition of employment.

Will would say that none of these actions by the Koch brothers violate first amendment rights because the worker has the option not to work for Koch Industries. For some bizarre reason he is unwilling to apply the same logic in the context of contractual obligations put in place by fellow employees.

In others words, Will is fine with any conditions that employers want to impose as a condition of employment, but somehow sees it as a first amendment violation if co-workers sign a contract that imposes conditions of employment. This is denying workers the right to freedom of contract.

 
UK Homeownership Program Big Winner, Just Like Subprime Lending Print
Sunday, 19 January 2014 08:48

The Washington Post used a standard that would have shown subprime loans to be a great boon to tell readers that a housing program by the conservative government in the UK has been a "winner." The Post's declaration of the program as a winner is based on the fact that the program, which allows people to buy homes with a 5 percent down payment, has allowed many people to buy homes who could not otherwise afford them. This was true of zero down subprime mortgages issued during the housing bubble years also.

The Post is also confused in its assessment of bubble conditions in the UK. The article implies that existence of a bubble depends on the rate of price increase as opposed to the level of prices, based on this view it tells readers that there may be a bubble in London, but little risk in the rest of the country.

The chart accompanying the piece shows rapidly rising prices in the London market, with prices rising at a more modest pace in the rest of the country and still below their bubble peak in 2007. However the level of prices in the UK is shown as being more than five and a half times its 1983 level. This implies an inflation adjusted increase in house prices of almost 140 percent over the last three decades. Rents have shown no comparable increase, which indicates that house prices are not being driven by the fundamentals of the housing market.

At some point it is likely that house prices will fall to a level more consistent with the fundamentals of the UK housing market. At that time, the beneficiaries of the Conservatives' homeownership program will be winners in the same way that subprime purchasers in the United States were winners following the crash here.

It is also worth noting that the increase in consumer spending mentioned in this article is likely directly related to the renewed run-up in house prices. People are likely spending against the wealth in their home. This is the well-documented housing wealth effect which shows people increasing annual consumption by between 5-7 cents for each additional dollar of housing wealth. This wealth effect was the reason that the savings rate fell to nearly zero at the peak of the bubble and then rose sharply after house prices collapsed in 2007-2008.

 
Property Rights, Regulation, and Brain Dead Environmentalists Print
Saturday, 18 January 2014 09:35

The company (incredibly named "Freedom Industries") responsible for the massive chemical spill in West Virginia that left hundreds of thousands of people without drinking water declared bankruptcy yesterday. This means that all of the people who had to suffer through days without water, and some who became seriously ill from drinking contaminated water, will likely not be compensated by this company for the damage it caused them.

Many people have referred to this spill as a failure of government regulation and blamed free-market fundamentalism. All of these folks should get checks from the various industry groups for major polluters.

Last I looked, believers in the free market supported property rights. Property rights mean not having someone else throw their waste on your property. If this is a difficult concept to understand, try erecting a slaughterhouse where the waste gets dumped on Bill Gates' front lawn. It's a safe bet that you will quickly be given a court order to stop immediately. If you ignore it, you will quickly find yourself in jail.

Are Bill Gates and other rich people who will have those who pollute their property thrown in jail believers in big government? For some reason this view that they have a right to not have people pollute their property and have the government enforce it gets put down as being part of free market fundamentalism. But when a West Virginia coal processing plant throws its waste into people's drinking water this is a question of government regulation?

It is easy to see how it is an advantage to rich people and to those who would like to be able to pollute with others bearing the cost to have these issues seen as fundamentally different in nature. But it is hard to see any logic that would justify this difference. And it is hard to see why anyone who doesn't want corporations to be able to pollute with impunity would accept this distinction.

People who don't want polluters to be able to operate with impunity are no more nor less market fundamentalists than Bill Gates when he has people arrested for dumping waste on his lawn. The only difference is whose rights are being respected.

 
Rising Prices for Apparel: Good News for Workers? Print
Saturday, 18 January 2014 09:14

Floyd Norris has an interesting piece showing that apparel prices are now rising more rapidly than other prices, after almost three decades in which they sharply trailed other prices. This is potentially very good news for most of the country's workers.

The forces at play here are the fall in the value of the dollar and the rise in wages in developing countries, most importantly China. While the availability of low-paid manufacturing workers in the developing world has placed severe downward pressure on wages over the last three decades, as these wages rise this pressure may be alleviated in the years ahead. There is a still a large gap in wages, but the recent relative rise in apparel prices indicates that this gap is narrowing. This will make U.S. workers better positioned to share in the gains of economic growth going forward.

 
David Brooks' Primitive Defense of the Rich Print
Friday, 17 January 2014 04:54

David Brooks is sweating hard trying to defend the one percent against the rest of the country and reality. His column today desperately warns readers:

"Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness."

Funny, I thought Social Security, the Fair Labor Standards Act (i.e. the 40-hour workweek), the National Labor Relations Board, and other products of the New Deal were pretty big accomplishments. Much of this was done quite explicitly with a sense of class consciousness. These were all measures that were backed by mass movements that sought to ensure that working people got their share of the economic pie. Good thing we have David Brooks to tell us the opposite.

This is far from the only place where Brooks seems to be at odds with reality. Brooks condemns focusing on inequality because it leads to ineffective policies like raising the minimum wage. He then cites a study by Joseph J. Sabia and Richard V. Burkhauser telling readers:

"Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.

"That’s because raises in the minimum wage are not targeted at the right people."

Actually the Sabia and Burkhauser study goes against the overwhelming majority of other studies on the topic as summarized in this analysis by University of Massachusetts professor Arin Dube.

Read more...

 

 
NPR Decides That the Federal Budget Is "Enormous" Print
Thursday, 16 January 2014 06:02

This adjective appeared in a top of the hour news piece (sorry, no link) referring to the spending bill approved by Congress on Wednesday evening. It would be interesting to know how it made this assessment. While the government spends more money each year than any of its listeners will see in their lifetime, it spends less relative to the size of its economy than almost any other wealthy country. It is also spending less relative to the size of the economy than it did in the years 2009-2012. The domestic discretionary portion of the budget, which was close to half of the spending bill, is smaller relative to the size of the economy than it has been in decades.    

Given this reality, the piece could have with more legitimacy used an adjective like "reduced" or "sharply reduced" as "enormous."

 
The Austerians Take Over the NYT's News Pages: The Case of France Print
Thursday, 16 January 2014 05:40

The New York Times news section praised the decision by French President François Hollande to cut social welfare spending and taxes in the same way that sports reporters trumpet the performance of the local team's quarterback. The article described the plan as moving in "a centrist direction" and said that "economic experts" were "gratified that Mr. Hollande finally seemed willing to wrestle with France’s intractable unemployment."

Really? Cutting spending when France's economy is still far below full employment is considered a pro-employment move by economic experts? Do these experts have any evidence to contradict the now vast literature, much of it produced by the International Monetary Fund, that shows such spending cuts will reduce growth and raise unemployment? (Paul Krugman does a nice job summarizing the case this morning. See also Mark Thoma.)

The point here is that the NYT is acting as a mouthpiece for the agenda of the right-wing in Europe. It is presenting a position that has been decisively defeated in the economic debates of the last five years as the consensus within the economics profession. If anything, the consensus view within the economics profession is that Hollande's program will slow growth and raise unemployment. France's economy needs more demand, not spending cuts.

 
<< Start < Prev 21 22 23 24 25 26 27 28 29 30 Next > End >>

Page 21 of 361

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives