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Bary Riholtz: The Plural of Anecdote IS Data [feedly]

The Plural of Anecdote IS Data
https://ritholtz.com/2019/02/the-plural-of-anecdote-is-data/

One of the key lessons of behavioral economics is the danger of not examining your own beliefs. Failing to consider the reasons that underlie our decision-making increases the risk of error. Although we can operate in our daily life on autopilot, other situations are not so forgiving. When we put capital at risk, the danger of not understanding what influences our decisions can be monetary losses, career risk or worse.

In this context, let's consider the aphorism, "the plural of anecdote is not data." This is the idea that a single example should never be used to extrapolate a broader rule about, well, anything. This applies to stocks, the economy, politics, Brexit — just about any situation where a compelling narrative might influence your views in spite of a dearth of evidence.

The truth of this statement is so self-evident that there seems to be little reason to have to investigate whether the quote is accurate or not. We tend to use it almost reflexively, usually in an attempt to refute a conclusion that cites a data point. Anecdotal evidence is not mathematically or scientifically sound. When our sample set consists of a single example (N = 1), our conclusion will have a margin of error of plus or minus 100 percent. In other words, as the fine print states, it is statistically insignificant.

We have learned the problem with extrapolating from single examples thanks to the work of Amos Tversky and Daniel Kahneman.1 In 1973, they were studying various mental shortcuts that people rely on when making decisions with incomplete information. How easily an example might come to mind — including anecdotes or random examples — might not be representative of the real world. Thus, the "Availability bias" was discovered.

Perhaps the best real-life example of the availability bias are shark attacks. Most of the time, interactions between humans and sharks occur without harm to the humans, but when they are to someone's detriment, lots of media coverage tends to follow.2

But the reality of the danger is very different. More people were killed by mosquitoes last year than have been killed by sharks in the past 100 years.  Indeed, annual deaths from selfies exceed yearly shark fatalities. In reality, you are much more likely to die from a medical error, which is the third largest cause of deaths in the U.S., than from a shark attack. What else is more deadly than sharks? Try armed toddlers  — young children who happen to get their hands on a firearm. But shark attacks are more memorable and dramatic, and therefore readily and easily recalled.

Which brings us back to anecdotes: As it turns out, the original quote about anecdotes had a very different context, and a much more nuanced meaning. It is attributed to Ray Wolfinger, who was a political scientist at the University of California-Berkeley.

Wolfinger's original statement was quite literally the very opposite of what we all have been using. He had actually said "the plural of anecdote is data." This should might affect the way we think about and use data.

The earliest discussion I could track down of the original quote was via the American Dialect Society.  Fred Shapiro, former editor of the Yale Dictionary of Quotations, had an email exchange with the professor about the statement's origins. Wolfinger recalled responding to a student's dismissal of a factual statement as a mere anecdote, told Shapiro: "It was meant to suggest that data does not have an immaculate birth, and that anecdotes lead to deeper research and then data."

The professor's take was not a warning against extrapolation or anecdotal evidence. If anything, he was encouraging data scientists to delve deeper into their experiences to discover fertile new areas of research and exploration. To the alert observer, a compelling anecdote should start the process of digging into the data to determine if something is merely an intriguing one-off or emblematic of a broader trend. A good story should be considered preliminary evidence, the start of a more serious inquiry.

In other words, the plural of anecdote, to be more precise, might be valid data leading to a potentially significant conclusion. For that reason, when an unusual anecdote capture one's attention, it shouldn't be casually dismissed, lest a deeper truth be missed.

Consider the ramifications of this for how analysts, economists, fund managers do their jobs. Algorithms are increasingly replacing repetitive tasks, and for people who work in finance, this is potentially an existential risk to their careers. The ability to identify something via an anecdotal observation, then use data to discover a new idea or concept might be relatively immune from the machines coming to replace you. So take heart: It might be a while — if ever — before AI and big data are sophisticated enough to do just that.

 

_______

1. Availability: A Heuristic for Judging Frequency and Probability, The Hebrew University of Jerusalem and the Oregon Research Institute, Cognitive Psychology 5, 207-232 (1973)

 -- via my feedly newsfeed

Dean Baker: Progressive Taxes Only Go So Far. Pre-Tax Income Is the Problem [feedly]

Taxation is the most direct method of approaching redistribution of  the massive robbery driving inequality, and democracy, off a cliff in  the US.

But WHAT and WHO are taxed, and WHEN can cover a mountain of frauds if you believe every PHRASE coming out of candidates talking points.

Dean is correct: alll progressives should seek to become as expert as possible in taxation, since its a key remedy to the mess the country is in.

Progressive Taxes Only Go So Far. Pre-Tax Income Is the Problem
http://cepr.net/publications/op-eds-columns/progressive-taxes-only-go-so-far-pre-tax-income-is-the-problem

Dean Baker
Truthout, February 4, 2019

See article on original site

In recent weeks, there have been several bold calls for large increases in progressive taxation. First we had Representative Alexandria Ocasio-Cortez (D-NY), often referred to as AOC, proposing a top marginal tax rate on income over $10 million. This sent right-wing talking heads into a frenzy, leading many to show they don't know the difference between a marginal tax rate and an average tax rate. (AOC's 70 percent rate would only apply to an individual's income above $10 million.)

More recently, we had Senator Elizabeth Warren propose a wealth tax that would apply to people with assets of more than $50 million. This tax could have Jeff Bezos sending more than $3 billion a year to the Treasury.

Given the enormous increase in inequality over the last four decades, and the reduction in the progressivity of the tax code, it is reasonable to put forward plans to make the system more progressive. But, the bigger source of the rise in inequality has been a growth in the inequality of before-tax income, not the reduction in high–end tax rates. This suggests that it may be best to look at the factors that have led to the rise in inequality in market incomes, rather than just using progressive taxes to take back some of the gains of the very rich.

There have been many changes in rules and institutional structures that have allowed the rich to get so much richer. (This is the topic of my free book Rigged.) Just to take the most obvious — government-granted patent and copyright monopolies have been made longer and stronger over the last four decades. Many items that were not even patentable 40 years ago, such as life forms and business methods, now bring in tens or hundreds of billions of dollars to their owners.

If the importance of these monopolies for inequality is not clear, ask yourself how rich Bill Gates would be if there were no patents or copyrights on Microsoft software. (Anyone could copy Windows into a computer and not pay him a penny.) Many other billionaires get their fortune from copyrights in software and entertainment or patents in pharmaceuticals, medical equipment and other areas.

The government also has rules for corporate governance that allow CEOs to rip off the companies for which they work. CEO pay typically runs close to $20 million a year, even as returns to shareholders lag. It would be hard to argue that today's CEOs, who get 200 to 300 times the pay of ordinary workers, are doing a better job for their companies than CEOs in the 1960s and 1970s who only got 20 to 30 times the pay of ordinary workers.

Another source of inequality is the financial sector. The government has aided these fortunes in many ways, most obviously with the bailout of the big banks a decade ago. It also has deliberately structured the industry in ways that facilitate massive fortunes in financial engineering.

There is no reason to design an economy in such a way as to ensure that most of the gains from growth flow upward. Unfortunately, that has largely been the direction of policy over the last four decades.

We can ignore the inequities built into the way we have structured the economy and just try to tax the big winners, as is being proposed. However, there are two major problems with this route, one practical and one political.

The practical problem is that the rich are not stupid. They will look to find ways to avoid or evade the various progressive taxes being proposed. Both AOC and Warren have relied on advice from some top economists in describing their tax proposals, but even the best–designed tax can be gamed. (Is it worth $3 billion a year for Jeff Bezos to remain a US citizen? As a non-citizen he wouldn't pay the wealth tax.)

Gaming the tax system will mean that we will collect considerably less revenue than a static projection would imply. It also will lead to the growth of the tax gaming industry. From an economic standpoint, this is a complete waste. We will have people designing clever ways to try to hide income and wealth, and in some cases getting very rich themselves in the process.

The political problem with going the tax route is that people attach a certain legitimacy to the idea that income gained through the market is somehow rightfully gained, as opposed to say, income from a government transfer program, like food stamps. The rich will be able to win support from many non-rich by claiming that the government has taken away what they have fairly earned.

By contrast, it is much harder for a drug company billionaire to cry foul because a drug developed with public funds, and selling at generic prices, has destroyed the market for his $100,000–a–year cancer drug. In the same vein, CEOs might have a hard time getting sympathy for the complaint that new rules of corporate governance make it easier to shareholders to bring their pay down to earth.

It is great that the rise in inequality seems likely to be a major topic in the 2020 presidential campaign. However, it is important that we think carefully about how best to reverse it.

 -- via my feedly newsfeed

Should We Mourn the Loss of Industrial Jobs? [feedly]

I completely concur with the sentiments in this post. 

However, the decline of mfg employment -- not actual production, which is vastly increased --  is a structural consequence of the advance of technology  -- as is globalization itself in large measure. Economies of scale are made dominant and largely (barring warfare) inevitable. 

However, if you are poor (citizens) state doomed either by the curse of natural resources or primitive agriculture, mfg can be the only bridge to the rise in human capital (skills) necessary for rising standards of living. 

I fear this is the case in Jefferson County, WV. 

By all rights the county's scenic location within 70 miles of two major cities, should give it opportunities to turn itself into a Silicon Valley, or a suburban Massachusetts style service/high tech economy. However, two fundamental requirements for such a vision are transportation and an educated workforce, AND significant engineering and innovation support in the university system. None of that is available given the corrupt state leadership. The Marc train  has less chance of finding a sustainable funding stream than the PEIA (pub employees insurance fund). The WV senate just approved a plan to destroy what remains of public education in  the state. The billionaire-coal Governor believes Trump is a paragon of family values.

Even tourism becomes poisoned by parochial and ignorant prejudices, sustained by poverties of culture and thought, such as the Harpers Ferry Mayor who has blocked rebuilding of one of the areas premier properties -- The Hilltop Hotel.

Without mfg  only massive investments in education and public works will do the trick. For a natural resource state or country, if you overthrow the thugs and bandits and do a Norway Sovereign wealth fund, you may have a chance at civilization and progress. Otherwise, you need powerful, and progressive, friends. Knights, so to speak. A daddy? 

Don't see one coming over the hill....

Should We Mourn the Loss of Industrial Jobs?
https://workingclassstudies.wordpress.com/2019/02/04/should-we-mourn-the-loss-of-industrial-jobs/

On his show, This Is Me Now, comedian Jim Jefferies recently joked that Canada should build a three-foot wall on its border to prevent 'Americans [who] are crawling over because their lungs are filled with coal from getting all their jobs back'. This joke clearly pokes fun at the US immigration debate and the risks of industrial work, yet it also betrays a sneering elitism about deindustrialisation and displaced workers. Middle-class and elite observers  with no roots or interest in working-class activism often adopt a paternalistic attitude – 'if only these silly workers accepted that times have changed' – and accuse workers of being rendered stupid by smokestack nostalgia that idealises the good times and erases the bad.

The toxic combination of neoliberalism and deindustrialisation has devastated working-class communities, organisations, and cultures. Statistics from communities that once relied on a single industry speak for themselves, coldly recording increased crime, poverty, and ill-health as the social fabric unravels. Yet statistics cannot capture the emotional narratives of deindustrialisation.

To capture that, we need to talk with the people who have lived it, as I have done with former Scottish steelworkers. Listening to the voices of workers reveals the complex experience of job loss and economic restructuring.

Steelmaking is a dirty job, performed under intense heat and exceptional danger. Harmful gasses and dust destroy workers' health, and horrific accidents cripples their bodies. Steelworkers know this all too well.  As former steelwork Brian Cunningham put it, a typical day could switch from 'mundane, repetitive, monotonous, to absolute terror … When it went wrong, it went spectacularly wrong'. Peter Hamill recalled how a fellow steelworker 'had been feeding a rope in and it had whiplashed him, cut him, killed him'. Death was a persistent reality for steelworkers. Tommy Johnston's 'lowest point' was witnessing a co-worker 'strangled in a conveyor belt'.

In light of such stories we might expect workers to be glad to see steelworks close.  But they aren't. Instead, they say they would not have left if given the choice. As Johnston said, he  would 'go back tomorrow' if he could. Why?

These workers are not deluded by rose-tinted nostalgia; they simply recognize that the jobs they have now don't offer the real, tangible benefits of industrial work. Following a path common to other displaced industrial workers, the former steelworkers I interviewed found new jobs as production line workers, taxi drivers, cleaners, or janitorial staff. Most of these jobs are insecure and low-paid. For James Carlin there was 'absolutely no comparison whatsoever' – his wage more than halved in his first new job. Likewise, Cunningham's annual salary diminished from £24,000 to £10,000. Finding it 'hard to say', Johnston admitted that after twenty-five years his annual wage is now just below his steelworker wage of 1991 in absolute terms. It wasn't just that wages are considerably lower. Workers also lost access to monthly bonuses, union-negotiated wage rises, and seniority-based promotion.  Instead of improving their standard of living, these former steelworkers had to cut household spending and sacrifice hobbies, social outings, and family holidays. Some sold their cars and even forfeited ownership of their homes.

But even more than the economic loss, these workers mourn the loss of a powerful and vocal union and the workplace culture it fostered.  Cunningham described labour relations in his former workplace as 'respectful'; the authority of the union 'always put the management on notice'. In stark contrast, his new management was aggressively anti-union: 'If you joined a union you were sacked, you were out the door'. Carlin observed workforce bullying and harassment by an 'almost dictatorial' management which actively suppressed union organising by outright dismissal. Not blinded by nostalgia, workers were in fact well aware that the culture of workforce/management 'mutual respect' was not underpinned by benevolence, but rather necessity, as workers' treatment corresponds to their respective power in the workplace. By contrast Carlin summed up his later non-union workplace by observing – 'we never had any power, we never had any voice'. The heavy unionisation of the workplace encouraged a culture of solidarity and co-operation.

Indeed, steelworkers felt part of a cohesive occupational community – 'part of something' – and took pride in a culture of camaraderie where workers 'looked after each other'. The workplace was embedded in community life through a plethora of trade union and steelwork voluntary associations, sporting teams, charity initiatives, educational programmes, hobby clubs, and political groups. Cunningham extolled the variety of social opportunities: 'The social side of it was terrific … we used to do overnight stays, dinner dances, we used to do mid-week breaks for the golf … you had your anniversaries, weddings, engagements, so the social side of it was really good'. Regular socialising fortified a sense of community among steelworkers, as Ian Harris described: 'you got invited to everything, you were at the fishing club dance, the bowling club dance – I was in the golf club so I was at the golf club dance, the football dance, everything'. Workers' social life was intrinsically linked to their workplace, and this high degree of social embeddedness fostered an intense sense of communal identity, as Frank Roy commented: 'it was your identity'.

The material basis of the working-class culture was demolished alongside the steelworks. The absence of the workplace community organisations and social events meant that post-redundancy employment lacked the interwoven social aspect and dynamic culture of solidarity which had defined steelmaking. In his new job, Carlin lamented, 'there was no camaraderie, there was no team aspect to it, you were an individual and you stayed an individual till the day you went home'. Family histories of steelmaking had encouraged even greater bonds among workers, blurring the lines between workplace and family. Ravenscraig steelworker Tommy Brennan felt like he belonged in the mill: 'I worked in the Craig, my brother worked in the Craig, my two sons worked in the Craig, my brother's three sons worked in the Craig'. Also from a family of steelworkers, Carlin saw steelmaking as his natural 'progression' after school; it was part of his heritage, a gateway into the labour movement, and central to his working-class identity. The closure of the steelworks ruptured this identity, provoking a sense of placelessness: 'I just couldn't settle, I couldn't settle, you know what I mean, it was always in my head about the steelworks'.

The closure of the steelworks disconnected workers from one another, bringing an end to decades long workplace relationships. Jim McKeown described losing a part of himself, a feeling he believed was even more pronounced among the older generation: 'There was bit of me missing, because a lot of those people, even though they are living round about, I've never seen them again … I think a lot of the older ones … a part of their soul was missing'. Frank Shannon, who was part of this older generation of steelworkers, agreed,  stating that many lost their sense of purpose and found their lives defined by loneliness: 'I know a lot [of] people that didn't last a year, dead … maybe drink, gambling … work was their life … it was devastating'.  Deindustrialisation fundamentally shattered occupational communities, rupturing workers' social lives and bringing an abrupt end to their communal work environment, leaving in its wake social isolation, bitterness, and alienation.

We should, of course, avoid simplistic nostalgia for industrial work, nor should we forget its dangers and adverse health effects. Yet workers are right to remember and value many aspects of industrial employment. The high pay delivered steady social mobility, the work itself fostered a sense of occupational pride and identity, and powerful trade unions provided a culture of solidarity which allowed workers to advance their rights.  Working-class jobs have now become endemically low-paid, exploitative, and insecure. Decades of neoliberalism have crippled the labour movement, delegitimised working-class history, and all but erased working-class collective memory. Most young workers now know nothing else but low paid precarious work. For them, that is the norm.

Memory of and even nostalgia for the rights once held by industrial workers, despite the risks and exploitation, reminds us of what can be achieved by workers when they have strong unions and working-class communities. Those who dismiss workers' positive reflections of heavy industry as little more than rose-tinted nostalgia are, purposefully or not, undermining a legitimate class memory of powerful workers and stable communities. In the process, they also undermine the potential organizing power of today's working class.

James Partick Ferns

James Partick Ferns is a Scottish Oral History Centre PhD student studying at Strathclyde University in Glasgow. His research examines the impact of deindustrialisation upon working-class identity and employment.

 -- via my feedly newsfeed

Tim Taylor: The Puzzle of the US Productivity Slowdown [feedly]

Tim Taylor reviews the CBO's commentary on the productivity slowdown. The reasons for it are not at all clear. My own bias -- not proven -- is that the value proposition if both services and intangibles is perhaps impossible to quantify in cash/commodity terms, beyond simple cost. Services are a lousy store of value. If you hire cleaners to clean your house for $100, for example, what it the value created? If one says "a clean(er) house", it will be hard to put a number on it other than the TIME, in hours, it saved the homeowner. But what does the homeowner do with the time? Some will use it to create more commercial value. Some not. Of the latter, some will use the leisure to improve their  "human capital" in diverse ways, but these improvements will be difficult to quantify. By a different route, the same may be true of intangibles, including software. Where is the line between an idea (an inherently 'public good', acc to classical economics) and its digitized version -- a computer program, or formula, or drawing? Also very difficult to convert to a quantifiable, discrete entities, like 'hours of homogenized labor power', followed by guesswork to calculate the economic values of the parts that can be quantified.

Another bias, also not proven, is that the dramatic increases in the percent of the work force engaged in physical vs service/intangible products is undermining the foundations of commodity production, and thus, capitalism.

The Puzzle of the US Productivity Slowdown
http://conversableeconomist.blogspot.com/2019/02/the-puzzle-of-us-productivity-slowdown.html

In the long-run, the average standard of living in an economy is determined by the average productivity of its workers. For example, Paul Krugman started Chapter 1 of his 1990 book, The Age of Diminished Expectations, by stating: "Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker."

Thus, it matters a lot that US productivity growth slowed down back around 2005, even before the start of the Great Recession, and that we don't really understand why. The Congressional Budget Office laid out the issues in its recent report The Budget and Economic Outlook: 2019 to 2029 (January 28, 2019). CBO pointed out that productivity growth--which it refers to by its more formal moniker of TFP for "total factor productivity"--seems to be higher or lower for periods of some years, with abrupt transitions between these periods.

"Over longer periods, however, years of comparatively steady TFP growth tend to be followed by rather abrupt transitions to years with steady but substantially different growth. For example, estimated trend growth in TFP remained  relatively strong in the 1950s and 1960s, slowed considerably from the early 1970s to the mid-1990s, and resurged in the late 1990s and early 2000s. Around 2005, a few years before\ the recession and financial crisis that began in 2007, TFP growth again slowed in many industries and throughout the international economy. In CBO's estimate, TFP growth in the domestic nonfarm business sector was only about one-third as rapid during the 2006–2017 period as it had been from 1996 to 2005."

In the aftermath of the Great Recession, CBO has been scaling back its productivity forecasts. The top line show the CBO productivity forecasts in 2012. The other lines show how the forecasts were reduced in 2014, 2016, 2018, and now in 2019.

Why is US productivity growth slowing down? CBO is forthright in admitting: "[E]xtensive research has failed to uncover a strong, compelling explanation either for the slowdown or for its persistence ..." The report runs through a number of potential explanations, before knocking each one on the head.

Is the productivity slowdown a matter of measurement issues?

"Even though mismeasurement of economic phenomena is widespread and persistent, measurement issues do not appear to have been substantially worse since 2005 than they were in the past and probably account for at most a small portion of the slowdown."

Is the productivity slowdown a result of slower growth feeding back to reduced productivity growth?

"The slower growth of the labor force and of aggregate demand in the aftermath of the recession resulted in relatively modest demand for capital investment, slow turnover of capital stock, and slow introduction of new technologies in new plants and equipment. Nevertheless, there is little evidence of a backlog of technology that exists but is not raising output and productivity through its effect on capital stock, which suggests that slower economic growth did not feed back strongly into TFP ...

Is it a result of less human capital for US workers, either as a result of less experience on the job or reduced growth in education?

"Highly skilled and well-educated baby boomers are retiring, and the educational attainment of younger cohorts only modestly exceeds that of their predecessors—two demographic effects that could be restraining TFP growth. Higher-skilled workers tend to continue working longer than their predecessors, however, and younger cohorts made especially strong gains in educational attainment during the recession and the ensuing slow recovery. Both developments have tended to improve the average skill level of the aggregate labor force. As a consequence, growth of the estimated quality of the aggregate labor force since 2005 has been only moderately slower than growth over the preceding 25 years, and that slowdown has played at most a minor role in the overall slowdown in TFP growth."

Is the problem one of overregulation?

"Declining dynamism in many industries, possibly exacerbated by increasing regulatory constraints, could be contributing to slower growth in TFP. Regulatory restrictions on homebuilding in denser, high-productivity urban regions could also be slowing TFP growth. Such problems have been developing slowly over time, however, and are difficult to associate with an abrupt slowdown in TFP growth around 2005."

Is the scientific potential for long-term innovation declining?

"Some researchers believe that long-term innovation may be slowing as well and that the economy is `running out of ideas.' The costs of research and innovation are increasing, they argue, and the resulting new ideas are not as economically significant as past innovations. Again, no evidence exists of an abrupt change around 2005 connected to such developments. Moreover, other, more optimistic researchers conclude that the pools of potential innovators and the potential market for innovative products are now global, that research tools have greatly improved and communication of innovations has become much more rapid, and that major advances in technology can continue to be expected in the future, though they may diffuse through industry rather slowly."

When it comes to productivity growth, the great irony in our public discourse is that it's common to hear concerns that there is likely to be both too little of it and too much of it. The concern over too little productivity growth is that without productivity growth we won't have the economic strength both to offer job opportunities and rising wages to American workers--along with having the economic strength to devote resources to environmental protection, health and education, assisting the poor, and other issues. The concern over too much productivity growth is that a combination of robots and artificial intelligence will be so ultra-productive that they will greatly diminish the number of jobs for humans.

Of course, the scenarios of no-productivity-growth and the ultra-productivity-growth are not both going to happen. Personally, I'm considerably more worried about the the problems of slow growth.

 -- via my feedly newsfeed

'Dean Baker: Medicare for All' is Not a Fantasy [feedly]

'Medicare for All' is Not a Fantasy
http://cepr.net/publications/op-eds-columns/medicare-for-all-is-not-a-fantasy

Dean Baker
CNN, February 1, 2019

See article on original site

In recent weeks several prominent Democrats have renewed the call for "Medicare for All" that Sen. Bernie Sanders highlighted in his 2016 campaign for the Democratic presidential nomination. This has drawn pushback from billionaires and potential presidential candidates Howard Schultz and Michael Bloomberg, who insist the country can't afford it. Since it's likely to be a major issue in the presidential campaign, it is worth looking at the question more closely.

First, many countries do have national health care insurance along the lines advocated by proponents of Medicare for All. The list includes Canada, France and Denmark, among others. These countries all have healthy economies, with living standards comparable to those in the United States. In fact, in all three countries, a higher percentage of prime-age workers (ages 25 to 54) are employed than in the United States. Like all countries, these countries have some economic problems, but it is absurd to claim that the cost of providing universal health care is destroying their economies.

Their health care systems also have comparable outcomes to the United States. This means not only do people live as long (actually they live somewhat longer on average), but people with health conditions such as cancer or heart disease on average do as well in countries with universal coverage as in the United States.

Having government-guaranteed medical coverage does cost money, and in all the countries with universal coverage, people do pay a larger share of their income in taxes. However, the necessary increase in taxes to provide universal care may be less than many people would fear.

First, most working people are paying something like a tax for their health care insurance since they get it through their employer. Employers don't provide insurance as a gift, and premiums for insurance come out of workers' wages in the same way that a tax would come out of those wages.

According to the Kaiser Family Foundation, the average employer payment for a family plan was more than $14,000 last year. Last year, this employer payment came to more than $900 billion. That's more than $2,700 for every person in the country. Most workers would probably not object if their employers paid this money to the government for universal coverage as opposed to an insurance company.

The other key point is that we pay close to twice as much for our health care as the average person in other wealthy countries. According to the Organization for Economic Cooperation and Development, we paid $10,200 per person for health care in 2017. Canada paid $4,800, Denmark paid $5,200, and France paid $4,900.

The main reason for the difference is that we pay twice as much for everything. We pay twice as much for prescription drugs, for MRIs and other medical equipment and tests, and our doctors get paid twice as much. In addition, the private health insurance industry costs us more than $250 billion a year (almost $800 per person) to act as an intermediary between patients and providers. In addition, hospitals, doctors' offices and other providers spend tens of billions to deal with complex claim forms that differ by insurer.

The government already pays for more than half of the nation's health care bill through Medicare, Medicaid, veterans' benefits and other public sector programs. Getting to Medicare for All would mean covering the other half of the current expenses, along with the additional costs of paying for the uninsured and under-insured who are not getting the care they need.

This would be a difficult political process as the insurance and pharmaceutical industries and other affected groups will use all the political power they have to prevent reductions in their income. But at the end of the day, it is undeniable that the United States can afford the same guarantee of health care enjoyed by people in other wealthy countries. The question is whether we have the political commitment to bring it about.

 -- via my feedly newsfeed

Bernstein: January Jobs: Another upside surprise shows the benefits of closing in on full employment. [feedly]

January Jobs: Another upside surprise shows the benefits of closing in on full employment.
http://jaredbernsteinblog.com/january-jobs-another-upside-surprise-shows-the-benefits-of-closing-in-on-full-employment/

The US labor market just keeps on rolling along, turning in one good jobs report after another. Payroll gains continue to outpace expectations, wages are handily beating inflation while not pushing it up much, participation continues to suggest more room-to-run than most economists expected, and even the slight uptick in the unemployment rate last month, to 4 percent, was likely a temporary blip caused by the government shutdown (more detail on that below). The underemployment rate, which also spiked last month, was another temporary victim of the shutdown, causing a sharp, temporary increase in involuntary part-timers (those working part-time who want to work full-time). These measures of increased slack should fully reverse in coming months, assuming the government remains open, of course.

Payrolls were up 304,000 in the first month of 2019, well ahead of economists' expectations for a gain of about 170,000, and the jobless rate ticked up a tenth to 4 percent. As noted, the uptick in the jobless rate is likely due to the shutdown and should fully reverse next month. The big jobs number for December was revised down significantly, from 312K to 222K, and other revisions to today's report (e.g., a small annual benchmark revision) suggest that we should smooth out the monthly data to better discern the underlying signal.

In other words, cue the JB/KB (Kathleen Bryant, who does all the work on this report) monthly smoother! It shows average monthly payroll gains over the past 3 months to be a very robust for this stage of the expansion: 241,000. The other bars, which take monthly averages over longer periods, are around the same height, implying an underlying monthly trend slightly north of 200,000. This is well above what most economists believed sustainable, given estimates of "supply-side constraints," i.e., the size of the available labor pool. Importantly, it appears this constraint is less binding than many thought, meaning there's more room-to-run in the job market, and that we're closing in on, but not yet at, full employment.

Participation measures are a bit hard to compare this month because of changes to the population weights in the survey (the weights are used to make the survey sample representative of the national population), but data provided in the report suggest participation ticked up in January to 63.2 percent, the highest rate since September 2013. The closely watched prime-age employment rate ticked up significantly for men, from 86.1 to 86.5 percent, and was up one-tenth of a point for women as well, from 73.4 to 73.5 percent (again, this monthly number should be handled with care due to the weighting change, but the underlying, positive trend is real and important).

The tight job market continues to generate near-cyclical highs in terms of year-over-year wage gains. Overall private hourly wage growth fell back slightly to 3.2 percent, from 3.3 percent in both November and December. For middle-wage workers–the 80 percent of the workforce in blue-collar or non-managerial jobs–wage growth was 3.4 percent. My estimate for January inflation (the official change does not get released until later this month) is 1.6 percent, driven down by low energy prices. That implies mid-level, real wage gains of 1.8 percent, a solid increase in buying power for these workers, many of whom have long been left behind (of course, we're talking averages here, and we know that even now, significant pockets of labor slack still persist in some places around the country).

This positive trend in wage growth is captured in the figures below, which use 6-month moving averages to smooth out the jumpy, underlying series. The acceleration is notable. The third figure, which includes my inflation forecast, zeros in on the growing gap between rising nominal wage gains for mid-wage workers and falling price movements. The gap between the two lines represents the real gains touted above.

This gap will like close somewhat as energy prices rise, but I expect some level of real wage gains to persist. Another important point about these real gains: given that productivity growth is running at around 1 percent, when real wages grow faster than output per hour, the share of national income shifts from profits to compensation. As much research has revealed, this share has long shifted in the other direction–the wage share has been historically low, meaning the profit share has been high. In other words, the current tight labor market appears to be delivering a long awaited re-balancing of these shares.

As noted, the government shutdown is likely playing a small, temporary role in today's report, though mostly in the unemployment rate. In terms of direct impact, the BLS reports that both furloughed and unpaid federal government workers should be counted in the payroll data, though furloughed workers should be counted as temporarily unemployed in the household data, the survey which yields the unemployment rate. Indirect, or spillover effects, such as a private-sector restaurant worker on temporary layoff because she works near a national park that was closed during the shutdown, could also be in play in today's data. That said, the strong topline jobs number underscores the BLS commissioner's statement today: "Our evaluation of the establishment survey data indicates that there were no discernible impacts of the partial federal government shutdown on the January estimates of employment, hours, or earnings."

I'll have more to say later about some of the guts of the report, but especially once we remove temporary shutdown effects from some of the household survey indicators, we're left with unequivocal evidence of a few very important facts. First, in an economy with too little worker bargaining power and too much inequality, the benefits of closing in on full employment are powerful and equalizing. And second, Chair Powell and the FOMC were smart to put interest-rate hikes on hold. There's non-inflationary room-to-run in this job market!

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