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Huffington Post Teaches NYT, WAPO, NPR and the Rest How to Report the News Print
Friday, 06 May 2011 12:43

Reporters have full time jobs reporting the news. This means that they are supposed to have the time to learn about the issues on which they are reporting. This is in contrast to their audience who generally have full time jobs doing something else.

This means that reporting both sides of an issue does not mean writing "Joe said the X" and "Jane said not X." It means that reporters are supposed to take a few minutes to find out whether or not X is true, and then share this information with readers.

This issue comes up with regard to Republican plans to "drill here, drill now" in response to the recent run up in gas prices. The Republicans claim that if we just allowed the oil companies to drill everywhere they want, it would get the price of gas back down to an acceptable level. Environmentalists and some Democrats have argued that given the size of the world oil market, any additional drilling can only have a minimal impact on oil prices.

The NYT, WAPO, and NPR have all reported this one as a he said/she said leaving it to their audience to determine who is right. By contrast, the Huffington Post did a bit of homework. They talked to some experts in the field. These experts told their audience that even if we make very generous assumptions about the potential increase in domestic oil production it will take at least 5 years to notably increase output and that it would have minimal impact on gas prices.

This is the way a real news organization deals with issues.

 
How Many Workers Should Lose Their Jobs To Avoid Upsetting the Dainty Financial Markets? Print
Friday, 06 May 2011 07:05

This is the question that readers of a Washington Post article on the administration's efforts to lower the value of the dollar should be asking. The article tells readers that the Obama administration and Federal Reserve Board Chairman Ben Bernanke probably both want a lower dollar to help correct the U.S. trade imbalance and create jobs, but that they can't say so openly for fear of upsetting financial markets.

Since the delay in lowering the dollar to a more sustainable level is causing millions of workers to be unemployed, it would be worth asking how many workers should be forced to suffer unemployment for long, just to keep the financial markets from being troubled. Economists believe that in the long-run financial markets respond to the fundamentals in the economy, so the worst that is likely to result from a bit of concern is a period of excessive volatility in the financial markets. This can lead to some traders losing or gaining large amounts of money; the long-term impact on the economy is likely to be trivial.

It is a very damning statement about the Fed and the administration if, as this article implies, they care so much about financial markets that they are forcing millions of workers to be out of work just to avoid a short period of uncertainty.

 
When It Comes to Labor Shortages, WSJ Tells Readers Not to Believe What You Can See With Your Own Two Eyes Print
Friday, 06 May 2011 05:20

The Wall Street Journal ran a piece about how manufacturers are finding it increasingly difficult to find the skilled workers that they need. The problem is that their current workforce is nearing retirement while relatively few younger workers have the necessary skills. The employers featured in the article even talk about how they have been raising wages to get and keep workers.

Of course the wages discussed in the article are not the sort that would sound high to most WSJ readers. According to the article, one of the manufacturers starts workers at full-time jobs paying between $25,000 and $50,000 a year. This is probably a somewhat lower wage than WSJ readers envision for their children.

More importantly, the charts accompanying the article do not show manufacturing wages rising rapidly. In fact, the chart actually shows that average nominal compensation in manufacturing has been flat or even declining slightly. This indicates that real hourly compensation has been falling over the last few years. This means that if the employers discussed in this article really are raising pay, then they are the exceptions. Most employers in the manufacturing sector are cutting pay in real terms, indicating that there is an excess supply of labor, not a shortage.

 
Does the Plunge In Oil Prices Mean We Have to Worry About Deflation? Print
Friday, 06 May 2011 05:02

In policy circles the worst thing you can do to a leading expert is to hold him/her accountable for their views. Remember all those folks who thought the economy and the housing market were just fine in 2006? They're all still there, using their expertise to opine on and guide economic policy. It is considered excessively cruel to point out that these experts somehow could not see the biggest downturn since the Great Depression until we were in the middle of it.

Anyhow, there is a subset of policy types who had been complaining about the rising price of oil and other commodities as evidence of runaway inflation. This in turn was usually attributed to the Fed's quantitative easing policy.

Now that these prices have fallen sharply, these experts presumably fear deflation. Hopefully we will be reading articles in coming days in which these experts insist on the need for more aggressive monetary policy in order to protect the economy against this threat.

 
David Brooks Shows How Far We Have Gone from the Founding Fathers: It Used to be That Columnists Had to Know What They Were Talking About Print
Thursday, 05 May 2011 21:47

David Brooks told readers that:

"Over the past months, there has been some progress in getting Americans to accept the need for self-restraint."

This should have hundreds of millions asking who needs "self-restraint?" Does Brooks thinks that the 14 million unemployed need more self-restraint? Do the 8 million people who want full time work but who can only find part-time employment need self-restraint? Do the millions of people who are facing the loss of their home need more self-restraint?

Brooks isn't very clear on who he thinks needs to restrain themselves but he praises Senator Alan Simpson, Representative Paul Ryan and President Obama for helping to lecture us on this need. Those familiar with the basic economic data know that the richest 1 percent have used their control of the political process to hugely increase their share of national income over the last three decades. The bottom 90 percent has seen little gain from economic growth over this period. Of course Representative Ryan wants to give more tax breaks to the richest 1 percent, so he doesn't seem to be preaching self-restraint to those who have been showing the least in recent years.

If Brooks' concern is making the welfare state sustainable, then he should be talking about fixing the health care system. It is easy to show that if per person health care costs in the United States were comparable to any other wealthy country then we would be projecting huge budget surpluses, not deficits.

If Brooks bothered to take a few minutes to study the issues he writes about then he would know this. Fortunately for him, he has job for which this skill is not required.

Brooks also claims that there is an inherent tension between economic dynamism and economic security, telling readers:

"Republicans still mostly talk about incentives for growth, and Democrats still mostly talk about economic security."

Actually many Democrats have been actively talking about more stimulatory fiscal policy, monetary policy and currency policy (i.e. a lower valued dollar). All of these policies would boost growth. It is remarkable that Brooks is apparently unaware of the large number of Democrats, including several of his colleagues at the New York Times, who have been vigorously pushing these positions. 

 
The Post on Government Health Care Spending Fails to Note that Other Countries Have Public Systems Print
Thursday, 05 May 2011 09:34

Those who thought that the Washington Post (a.k.a. Fox on 15th Street) couldn't get any worse, have just been proven wrong yet again. The Post ran a little primer telling readers about Medicare, Medicaid, and Social Security.

The Post tells readers:

"a GAO report found that total government health-care spending in the United States is somewhere in the middle. In the United States, spending on public health was 6.9 percent of gross domestic product in 2005, while it was 8.9 percent in France, 8.2 percent in Germany and 7.2 percent in the United Kingdom. On the lower end of the spectrum, Australia spent 6.4 percent of GDP on health care and Canada spent 6.9 percent. Some of the countries that spend more have had a demographic shift to an older population sooner than the United States."

 

Okay, boys and girls, can anyone see the problem with this discussion?

That's right! All the other countries included in this discussion have public health care systems. The figures cited for public health care spending comprise the bulk of their national spending on health care. Only in the United States do we have a large private health care sector that spends roughly the same amount as the public sector.

This means that rather being in the middle of the pack, as this discussion implies, we are way over the top. To pay for most of the health care needs of our seniors and our poor, our government pays almost as much Germany, Canada, and the U.K. do to provide for the health care needs of their entire population.

Of course this point should have been central to this whole primer. The reason that Medicare, Medicaid, and Social Security are projected to "usurp much of the revenue from federal taxes," is that health care costs in the United States are out of control. If the U.S. paid the same amount per person for health care as any of these other countries it would be looking at huge budget surpluses in the long-term, not deficits.

There is one other especially striking item in this piece. It told readers:

"The last major change to Social Security happened in 1984, when President Ronald Reagan raised the Social Security tax rate (the percentage of income under the maximum taxable earnings limit that is subject to tax) and the full retirement age from 65 to 67."

Umm, the year was 1983, not 1984. This primer is not ready for prime time.

 
Unemployment Insurance Claims Jump, This Is News Print
Thursday, 05 May 2011 08:47

Weekly unemployment claims jumped to 474,000 last week, an increase of 43,000 from the level reported the previous week. This is seriously bad news about the state of the labor market. It seems that the numbers were inflated by unusual factors, most importantly the addition of 25,000 spring break related layoffs in New York to the rolls due to a changing vacation pattern, however even after adjusting for such factors, claims would still be above 400,000 for the fourth consecutive week.

This puts weekly claims well above the 380,000 level that we had been seeing in February and March. This suggests that job growth is slowing from an already weak level. This is news that should be reported prominently.

 
USA Today Says Rents Are Rising, BLS Says Otherwise Print
Thursday, 05 May 2011 05:53

USA Today told readers that rents are now rising rapidly because of an improving job market. That should raise suspicions, since the job market is not really improving much.

If we check out the data from our friends at the Bureau of Labor Statistics (BLS), we don't see much of story. Here's the trend for owner's equivalent rent (OER). This is a measure of rent that looks at the implicit rental value of owner occupied homes. The BLS index for OER has risen by less than 1 percent over the last two years. There's not much of a story of rising rents here.

OER

We get a little different picture if we go to the BLS index for rent proper which measures the increase in the price paid by people who are actually renting their home. This shows that rents have risen by 1.4 percent over the last two years, with most of the increase coming in the last year.

rent

The likely reason for the difference is that the index for the rent paid on rental units includes utilities that are provided by landlords under the rent contract. Since the cost of heating and electricity have risen substantially in the last year, it is not surprising that a rental index including these utilities would rise more rapidly than one that does not.

Still, the 1.0-1.5 percent increase shown by the BLS index is far below the 4.0-5.0 percent increases reported in the article. There are 3 likely reasons for this difference. First, the BLS index is nationwide. USA Today has focused on a few cities that were likely selected because they had rapidly rising rents.

The second reason is that the indexes USA Today cites refer to open units on the market. In any given year only a fraction of rental units turn over. These units are likely to experience larger rent increases than units where the tenant does not change. Typically landlords are reluctant to raise rents on current tenants since they don't want to risk driving them out.

The third reason is that the USA Today indexes don't control for the mix of units. If the units coming on the market are disproportionately new units that have just been built then it is reasonable to believe that they are in better condition and have more amenities that the rental housing stock as a whole. This means that the index might be showing an increase simply because the units in it this year are better on average than the units that were in it last year.

These three factors likely explain the gap between the modest rate of rental inflation reported in the USA Today article and the very low inflation rate reported by BLS. In short, rents are likely very much under control, with much of any increase in market rents being attributable to higher utility costs.

 
Jobs, Regulation, and Republican Nonsense: Do Post Readers Really Have More Time to Investigate Issues Than Its Reporters? Print
Thursday, 05 May 2011 05:08

The Post apparently believes that its readers have more time and expertise to evaluate the claims of politicians than its reporters. How else can one explain the he said/she said piece on jobs programs that the Post ran today?

The article featured Democrats demanding new government programs to create jobs while the Republicans insisted that excessive regulation was the problem. If the latter were true it would be necessary to explain why excessive regulation did not prevent the economy from creating 3 million jobs a year from 1996 to 2000. A real newspaper would have devoted some space to evaluating the competing claims of the two parties.

 
The Washington Post Doesn't Know that People Are Concerned About Jobs Print
Thursday, 05 May 2011 04:55

In one of his debates with President Carter in 1980, Ronald Reagan famously quipped that everyone who supported abortion has already been born. In the same vein, it is probably worth noting that everyone who works for the Washington Post has a job. This may explain its fixation with reducing the deficit while virtually ignoring the most prolonged period of high unemployment since the Great Depression.

A front page article told readers that:

"With voters growing increasingly anxious about the debt, Republicans and some Democrats are refusing to approve additional borrowing without an explicit strategy to reduce deficit spending."

Actually polls consistently show that jobs are far and away voters main concern. Furthermore, the most likely reason that voters might be "growing increasingly anxious about the debt" is that the media is constantly bombarding them with hysterical and often largely untrue pieces about the debt and its consequences.

This article refers to Representative Ryan's plan for privatizing Medicare. It would have been useful to note that the Congressional Budget Office analysis of this policy projects that it would add more than $34 trillion (almost 7 times the size of the projected Social Security shortfall) to the cost of buying Medicare equivalent policies over the program's 75-year planning horizon.

 
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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.

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