Beat The Press

How Has AP Determined that Ecuador's Debt and Deficits are Unsustainable?

It made this assertion in two different articles last week, without attributing it to a source. The budget data from the I.M.F. do not seem to support this claim. (The numbers are all percent of GDP.)

While the deficits run in 2015 and 2016 were unsustainable, the deficit came down sharply in the next two years. The deficit run in 2018 and projected for 2019 could be sustained indefinitely. (Ecuador uses the dollar as its currency, so it must be able to borrow the money needed to finance its deficit in financial markets.)

Subject Descriptor

2015

2016

2017

2018

2019

General government net lending/borrowing

-6.119

-8.232

-4.533

-0.949

0.022

General government structural balance

-6.714

-6.783

-4.020

-1.676

-0.012

General government primary net lending/borrowing

-4.688

-6.670

-2.415

1.541

2.659

General government gross debt

33.798

43.166

44.617

46.132

49.199

Trump Declares Victory in China Trade War

(This post originally appeared on my Patreon page.)

Back in the late 1960s, when it was clear that the United States was losing in Vietnam, Vermont Senator George Aiken came up with the plan to declare victory and leave. It seems that Donald Trump has stolen the senator’s playbook. 

While we don’t know much of the details of Trump’s partial deal with China, it seems almost certain that he has not won most of his demands. According to press accounts, China will commit to buy a large amount of U.S. agricultural products. This is a highly visible, but largely pointless victory for Trump.

All the major agricultural commodities, such as wheat, corn, soybeans, and beef, sell on massive world markets. If China commits to buying some amount from U.S. producers, for the most part, it will come at the expense of producers from other countries. It will not be an increase in world demand. This means that the displaced producers will be dumping their now surplus commodities on world markets, leaving the market price received by U.S. farmers little changed. 

Anyhow, it was hardly a surprise to some of us that Trump would go the declare victory and leave route. My colleague at the Center for Economic and Policy Research, Mark Weisbrot, made exactly this prediction a couple of weeks ago, as did I, a few days earlier

This outcome was easy to see. Trump could not care less about U.S.-China trade policy. He does care about not looking weak and he very much wants to be re-elected. The obvious answer is to say that he won. It doesn’t matter that he may have gotten almost nothing of what he demanded. His followers will believe him and when the media raise questions after seeing the deal, we all know the Trump response: FAKE NEWS.

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Is the Washington Post Selling Headlines to Mark Zuckerberg?

That is undoubtedly what readers are asking after seeing the headline, "Facebook’s Mark Zuckerberg struggles to balance truth and free speech." The headline is for the recording of a remarkable uncritical interview of Zuckerberg.

In the interview, Zuckerberg presents himself as struggling to deal with the trade-off between banning ads that are untrue and allowing free speech. If a reporter had been conducting the interview, they would have pointed out that every newspaper in the country faces the same problem and, unlike Zuckerberg, seem capable of dealing with it.

They will not print ads that they know to be untrue and, if they are shown evidence that an ad is untruthful after it runs, they typically will run a correction. It would have been useful to point this out to readers.

Are Mark Zuckerberg and Facebook Too Incompetent to Do What Publishers of Small Town Papers Do?

That seemed to be what Zuckerberg was saying in an interview with the Washington Post. Zuckerberg responding to complaints that Facebook was allowing peope to lie in political ads:

"'People worry, and I worry deeply, too, about an erosion of truth,' Zuckerberg told The Washington Post ahead of a speech Thursday at Georgetown University. 'At the same time, I don’t think people want to live in a world where you can only say things that tech companies decide are 100 percent true. And I think that those tensions are something we have to live with.'"

Zuckerberg apparently feels tech companies lack the competence to determine the truth of claims that people make in ads and elsewhere. Traditional publishers make this determination all the time. They refuse ads that they believe to be false and issue corrections for ads that they run and then later are presented with proof that the ads are false.

It may well be the case that Facebook is run by incompetents, but that is an argument for improving the quality of its staffing, not allowing it to be a medium for spreading lies.

Fact Check: Warren Right, AP Fact Checkers Wrong, Economists Who Know the Data Blame Trade for Loss of Manufacturing Jobs

It is amazing how reporters and many economists feel the need to deceive the public about the reason for the loss of manufacturing jobs in the last decade. The number of manufacturing jobs was little changed from 1970 to 2000. From 2000 to the end of 2007 (before the Great Recession) we lost 3.4 milllion manufacturing jobs as the trade deficit exploded.

Fans of logic and arithmetic might think there is a connenction there, the AP's Fact Checker apparently does not. It tells readers:

"On trade

ELIZABETH WARREN: “The data show that we’ve had a lot of problems with losing jobs, but the principal reason has been bad trade policy. The principal reason has been a bunch of corporations, giant multinational corporations who’ve been calling the shots on trade.”

THE FACTS: Economists mostly blame those job losses on automation and robots, not trade deals.

So the Massachusetts senator is off."

Here's the picture as of a few years ago (sorry, I'm too lazy to update it).

baker buffie blue collar 2016 02 21 1

Apart from the huge falloff in the years from 2000 to 2007, which continued with the Great Recession, it is also interesting to note that manufacturing employment stabilized, and has risen modestly in the years since the Great Recession. So the economists AP relies on as sources much believe that robots and automation stopped displacing workers in manufacturing some time in 2010. Alternatively, we might note that the trade deficit has stabilized in the last nine years.