NYT U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning [feedly]

U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning
https://www.nytimes.com/2020/02/05/business/economy/trump-trade.html

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WASHINGTON — The overall United States trade deficit shrank last year for the first time in six years as the American economy cooled, domestic oil production soared and President Trump waged an aggressive global trade war to rewrite America's trading terms.

The trade deficit for both goods and services fell to $616.8 billion in 2019, down $10.9 billion from the previous year, according to data released by the Commerce Department on Wednesday.

Both imports and exports fell as American factory activity slowed and businesses and consumers felt the impact of tariffs imposed on China, the European Union, Canada, Mexico and other nations. Total American exports dropped $1.5 billion to roughly $2.5 trillion, while imports fell $12.5 billion to $3.1 trillion.

Soaring domestic oil production was a major factor in the shrinking trade deficit, cutting into imports of foreign crude oil by $30.3 billion last year. Exports of civilian aircraft also fell $12.6 billion last year, reflecting the fallout from the deadly crashes of Boeing's 737 Max airplane.

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But the most dramatic changes in global trade flows occurred with China, the target of Mr. Trump's biggest economic offensive.

The trade deficit in goods with China shrank $73.9 billion to $345.6 billion in 2019. It was the first drop on an annual basis since 2016, as both the United States and China placed tariffs on hundreds of billions of dollars of each others' products.

In particular, American imports from China fell sharply in the final two months of the year, as companies worked to avoid tariffs that Mr. Trump has placed on $360 billion worth of Chinese goods and the potential that he could tax nearly everything from China.

Mr. Trump and his advisers have pointed to trends in trade flows as evidence that his trade policies are helping to revive factories and construction sites around the nation.

"This is a blue collar boom," Mr. Trump said in the State of the Union address on Tuesday evening.

But most economists have been skeptical, saying that the country's factory activity weakened last year, and that the trade flows largely reflect a cooling American and global economy.



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The articles posted on this listserv also appear (much prettier) on the "Socialist Economics\" facebook group (yes, that backslash is there -- I mistyped when creating the group and could not take it back without undue labor.)

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Review of Strong Towns [feedly]

Review of Strong Towns
http://dollarsandsense.org/blog/2020/01/review-of-strong-towns.html

Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity
by Charles L. Marohn, Jr

Review by Polly Cleveland

Along with the automobile, Detroit pioneered a new American way of living: the auto-dependent housing development consisting of single-family houses arrayed around cul-de-sac streets. After World War II, the Detroit model subdivision exploded into the suburbs around the country. A post-war return to normal life, federal subsidies for veterans and new highways leading out of town—all combined to create a huge boom in suburban housing demand. Aided by federal and local subsidies for utilities, developers could build complete huge new single-family housing subdivisions outside existing cities—such as the famous Levittowns. Middle class white families moved out into these shiny new developments, leaving behind poorer and often minority families in older inner-city neighborhoods.

Before that time, most houses were built one by one, adjoining or replacing existing housing. Neighborhoods therefore represented a mix of older and newer, smaller and larger buildings. Limited transportation kept housing relatively dense. The high density in turn made it inexpensive for city governments to maintain services—police, fire, garbage, schools—and infrastructure—roads, sidewalks, sewers, water supplies, and other utilities. Moreover, due to the mixed age of structures, there were not unexpected peaks in costs.

All that changed with the new subdivisions. At first, they generated substantial tax revenues, making cities eager to encourage and subsidize more of them by extending utilities. But this pattern of growth contained a fatal flaw: Because all the utilities and houses in a subdivision were built at the same time, they all aged at the same rate. After 25 years or so of fiscal surplus, costs began to rise steeply for repairing infrastructure. In wealthier subdivisions, the city could raise property taxes to cover costs. In ordinary middle-class subdivisions, when city maintenance lagged, those residents who could afford it moved to newer subdivisions further out, leaving shabby houses on crumbling streets inhabited by ever poorer and often minority residents. This happened first in Detroit, where huge areas now lie abandoned. It is now happening in inner suburbs around the nation. Yet as inner suburbs crumble, towns pursue the same old financial fix: subsidizing brand-new subdivisions on raw land.

Ferguson, a suburb of St. Louis Missouri, makes a good example. In 1970 the population of some 29,000 was 99% white. By 2010, the population had fallen to 21,000, only 29% white. Ferguson came to national attention in 2014 when a police officer shot and killed an unarmed black teenager, setting off widespread protests. Investigative reporters found that the financially-strapped local government, still largely run by white officials, funded itself in part by imposing fines on the poor residents for minor offenses like driving with a broken headlight, jailing them when they couldn't pay. Ferguson turned out to typify many aging suburbs.

Today the tragedy comes full circle: the more affluent members of the younger generation are moving back into the run-down central city neighborhoods that their grandparents abandoned. In part, that's because today's families need both parents to work, making central locations more desirable. As these people return, they gentrify old neighborhoods, pricing out seniors as well as working-class or poorer residents. The local residents of course fight back, with rent control and severe restrictions on new construction or modifications of old buildings. New York City's newly-fortified rent control laws essentially forbid landlords from raising rents to cover the cost of renovations. California has seen an explosion of homeless and "housing insecure" people, including people with steady jobs.

The author of Strong Towns, Charles Marohn, is a civil engineer and planner. He began his career advising towns on how to attract and support those so-desirable new subdivisions. Eventually the numbers caught his attention, particularly the staggering cost of maintaining the infrastructure in aging single-family subdivisions. He came to recognize that much of this infrastructure was simply long run unsustainable, and that towns were committing financial suicide in their pursuit of "growth."

Marohn also found that in their pursuit of "shiny and new," towns may destroy the most financially productive parts of their tax bases. These are often not the most valuable properties, but roughly those that yield the most revenues per acre. He gives an example from his home town of Brainerd, Minnesota. There were two identical adjoining blocks in an area the town had labeled "blighted." Aided by municipal subsidies, one block was razed and replaced with a Taco John's franchise with plenty of parking. But while the Old and Blighted block had a tax value of $1.1 million, this Shiny and New block had a value of only $620,000. Moreover, Old and Blighted housed 11 small businesses with local owners plus 6 extra full-time workers. On Shiny and New, Taco John's provided 20 to 25 part-time jobs. Not even new jobs, because Taco John's had merely relocated from three blocks away.

Marohn advises towns first of all to prioritize maintenance of the most financially productive areas, whether blighted or not. As he writes, "Mow the grass. Sweep the streets. Patch the sidewalks. Pick up the trash. Fill the potholes…See a streetlight out: replace it. See a weed: pull it. See a crosswalk faded: repaint it…The neighborhoods that are generating such wealth for the community need to be showered with love."

But then Marohn makes a recommendation that will shock most communities: reconsider the policies that restrict change and discourage denser development. Oversized new buildings pop up in the wrong places, he says, because it's so difficult, time-consuming and expensive for developers to battle all the restrictions that when they do finally get a permit, they build as high as they can. Property owners, he says, should have the right to develop their properties to the next level without their neighbors' permission. That is, an owner in a single-family neighborhood should have a right to install a mother-in-law unit, or even build two or three units. In a neighborhood of three units, owners should have a right to build low-rise apartment buildings. And so forth. Meantime, towns should scrap those off-street parking requirements, which waste land, raise housing costs and encourage reliance on cars.

In all his compelling case for allowing higher density, I wish Marohn had addressed the role of property taxes. As I wrote in How a Progressive Tax System Made Detroit a Powerhouse (and Could Again), a tax system that relies heavily on taxing land is both highly progressive and pro-density. Detroit collapsed not just due to unsustainable low density subdivisions, but also due to the loss of such a system. But the book is essential reading for local officials and all of us who love cities.

Marohn now spends his time on his Strong Towns non-profit media organization, setting up events and webinars to discuss growth, development and the future of cities.

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How Zombies Ate the G.O.P.’s Soul [feedly]

True. As usual PK hits the nail on the zombie head correctly. Tax cuts provide growth, tax increases do not --  is a Zombie notion -- proven wrong repeatedly, but still it lives. PK is supreme in the metaphysical universe, where the irrational must be false. A thing should to be separated from its opposite, other than the criticism of its negation a part of defining 'the thing.'  A virtue of dialectics is its intuition that things exist in motion, and in an intricate entanglement with their opposites. Thus social classes can have both antagonistic and binding interests, and their perceptions of the same "truth" can appear as inverses of each other. The 'social class' truth of all who live on wages and salaries is that progressive taxation expands pubic goods and therefore standards of living improvements are widely distributed. But for billionaires the 'class truth' is that progressive taxation reduces their wealth. 

How Zombies Ate the G.O.P.'s Soul
https://www.nytimes.com/2020/02/03/opinion/republican-party-trump.html

Is this the week American democracy dies? Quite possibly.

After all, everyone in Washington understands perfectly well that Donald Trump abused the powers of his office in an attempt to rig this year's presidential election. But Senate Republicans are nonetheless about to acquit him without even pretending to look at the evidence, thereby encouraging further abuses of power.

But how did we get to this point? Part of the answer is extreme partisanship and right-wing political correctness (which is far more virulent than anything on the left). But I also blame the zombies.

A zombie idea is a belief or doctrine that has repeatedly been proved false, but refuses to die; instead, it just keeps shambling along, eating people's brains. The ultimate zombie in American politics is the assertion that tax cuts pay for themselves — a claim that has been proved wrong again and again over the past 40 years. But there are other zombies, like climate change denial, that play an almost equally large role in our political discourse.

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And all of the really important zombies these days are on the right. Indeed, they have taken over the Republican Party.



It was not always thus. Back in 1980 George H.W. Bush called Ronald Reagan's extravagant claims about the effectiveness of tax cuts "voodoo economic policy." Everything that has happened since has vindicated his original assessment. Deficits ballooned after Reagan cut taxes; they shrank and eventually turned into surpluses after Bill Clinton raised taxes, then ballooned again after George W. Bush's tax cuts.

Voodoo has also crashed and burned at the state level: The Kansas experiment in radical tax cuts was a dismal failure, while California's tax hike under Jerry Brown, which conservatives declared a case of "economic suicide," was followed by a revenue and economic boom.

Yet voodoo economics has become unchallengeable doctrine within the Republican Party. Even fake moderates like Susan Collins justified their support for the 2017 Trump tax cut by claiming that it would reduce the budget deficit. Predictably, the deficit actually exploded, and now exceeds $1 trillion a year.

The politics of climate change have followed a similar trajectory. Global temperature keeps setting records, while climate-related catastrophes like the Australian wildfires are proliferating. Yet a majority of Republicans in Congress are climate deniers — many of them buying into the notion that climate change is a hoax perpetrated by a vast international scientific conspiracy — and even those, like Marco Rubio, who grudgingly admit that global warming is real oppose any significant action to limit emissions.


It's important to realize that the zombification of the G.O.P. isn't a recent phenomenon, something that happened only with Trump's election. On the contrary, zombies have been eating Republican brains for decades. Voodoo economics had completely taken over the party by the early 2000s, when then-House majority leader Tom DeLay declared, "Nothing is more important in the face of war than cutting taxes." Climate deniers have ruled since at least 2009, when only eight House Republicans supported a bill to limit greenhouse gas emissions.

What recent events make clear, however, is that zombie ideas haven't eaten just Republicans' brains. They have also eaten the party's soul.

Think about what is now required for a Republican politician to be considered a party member in good standing. He or she must pledge allegiance to policy doctrines that are demonstrably false; he or she must, in effect, reject the very idea of paying attention to evidence.

It takes a certain kind of person to play that kind of game — namely, a cynical careerist. There used to be Republican politicians who were more than that, but they were mainly holdovers from an earlier era, and at this point have all left the scene, one way or another. John McCain may well have been the last of his kind.

What's left now is a party that, as far as I can tell, contains no politicians of principle; anyone who does have principles has been driven out.

Now, the news media, with its constant urge to seem "balanced," has a hard time coping with this reality; it's always looking for ways to portray at least some Republicans as admirable figures. This has made it easy prey for charlatans like Paul Ryan, who pretended to be serious about his fiscal principles. But he was always an obvious flimflam man.

Anyway, a result of decades of zombification is a Republican caucus that consists entirely of soulless opportunists (and no, the fact that some of them like to quote Scripture doesn't change that fact).

I guess you might have hoped that there would be some limits to what these apparatchiks would accept, that even they would draw the line at gross abuses of power and collusion with foreign autocrats. What we've learned, however — and perhaps more important, what Trump has learned — is that there is no line. If Trump wants to dismantle democracy and rule of law (which he does), his party will stand with him all the way.

The Times is committed to publishing a diversity of letters to the editor. We'd like to hear what you think about this or any of our articles. Here are some tips. And here's our email: letters@nytimes.com.

Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.

Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography.


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How US Science and Engineering Depends on Immigrants [feedly]

How US Science and Engineering Depends on Immigrants
http://conversableeconomist.blogspot.com/2020/02/how-us-science-and-engineering-depends.html

Every other year, the National Science Foundation is required to publish a "Science and Engineering Indicators" report. For the January 2020 version, the NSF went with a summary report, called "The State of U.S. Science & Engineering 2020," which is then accompanied by seven more detailed reports. Here, I'll focus on some evidence from the overview report on the subject of how the US science and engineering workforce depends on immigrants, both as worker and also as students in its higher education system.

Foreign-born workers—ranging from long-term U.S. residents with strong roots in the United States to more recent immigrants—account for 30% of workers in S&E occupations. The number and proportion of the S&E workforce that are foreign born has grown. In many of the broad S&E occupational categories, the higher the degree level, the greater the proportion of the workforce who are foreign born. More than one-half of doctorate holders in engineering and in computer science and mathematics occupations are foreign born (Figure 9).

Within the US higher education system, a disproportionate number of the science and engineering degrees go to immigrants--many of whom then remain in the US economy at least for a time

In the United States, a substantial proportion of S&E doctoral degrees are conferred to international students with temporary visas. In 2017, temporary visa holders earned one-third (34%) of S&E doctoral degrees, a relatively stable proportion over time. They account for half or more of the doctoral degrees awarded in engineering, mathematics and computer sciences, and economics. Three Asian countries—China, India, and South Korea—are the largest source countries and accounted for just over half (54%) of all international recipients of U.S. S&E research doctoral degrees since 2000. By comparison, students on temporary visas earn a smaller share (6% in 2017) of S&E bachelor's degrees. However, the number of these students has more than doubled over the past 10 years.

A majority of the S&E doctorate recipients with temporary visas—ranging between 64% and 71% between 2003 and 2017—stayed in the United States five years after obtaining their degree. Those from China and India, however, saw a decline in their respective "stay rates" from 93% and 90%, respectively, in 2003 to 84% and 85%, respectively, in 2013; the rates remained stable from 2013 through 2017. The stay rate increased for those from South Korea (from 36% in 2003 to 57% in 2017). Stay rates also vary by field of doctoral degree. Among S&E doctorate recipients, social sciences (52%) has a lower stay rate than the average across all fields (71% in 2017).

I know that we live in times of substantial concern about how technology may be transferred from the United States to other countries. Whatever one's concerns in that area, there is also another side to consider, which is that in raw numerical terms the US has a heavy dependence on imported science and engineering workers and American universities in science and engineering fields maintain their status and preeminence thank in substantial part to their foreign students. 

The NSF report also points out that when it comes to sheer numbers of science and engineering degrees, the dominant position of the US and European economies is eroding. For example, here are the trends in the number of university degrees  given in science and engineering. That rising purple line is the total for China, taking off. Concerns are sometimes raised that a number of these degrees in China may not represent especially high quality achievement in learning. But the sheer numbers are nonetheless striking--and the quality does seem to be improving over time. 

A similar if less vivid trend is apparent in granting of doctoral degrees in science and engineering fields. Here, the large EU economies have a lead compared to the US, with China and India rising rapidly

The economic competitiveness of nations is built to a substantial extent on the talents of their workforce.  It seems likely that future economic growth for the US and other advanced economies will depend heavily on the industries built on advances in science and engineering. One of the great competitive advantages for the US economy has been that its education system, economy, and society are attractive and open to so many workers and students from around the world with skills in these areas. 

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Primer—The state of the union for working people [feedly]

Primer—The state of the union for working people
https://www.epi.org/blog/primer-the-state-of-the-union-for-working-people/

In preparation for President Trump's State of the Union speech, the Economic Policy Institute has assembled research from the last year that examines the real state of the union for working people on wages, manufacturing and trade, taxes, labor standards, housing, and immigration.

Wages and employment

• 2019 had solid job growth, but wage growth slowed. Average monthly job creation has held remarkably steady for the past nine years, but it did soften in the last year, from 223,000 in 2018 to 176,000 in 2019. Wage growth slowed for much of the year, providing further evidence that we are not yet at genuine full employment. After hitting a recent high point of 3.4% year-over-year wage growth, the growth rate has measurably decelerated and wage growth closed out the year at only 2.9% in December.
• Wage growth for low-wage workers has been strongest in states with minimum wage increases
• More on longer wage trends in our Nominal Wage Tracker.

Manufacturing and trade

• Jobs lost to China. Recent EPI research found that 700,000  jobs were lost to China in the first two years of Trump's presidency—many of them manufacturing jobs.
• China trade deal will not restore 3.7 million U.S. jobs lost since China entered the WTO in 2001
• U.S.-Mexico-Canada Agreement—Weak tea, at best
• What's good for Wall Street is often bad for American workersand manufacturing

Taxes

• Tax Cuts and Jobs Act (TCJA) has been a policy failure. Notably, business investment contracted for the third straight quarter—the first time this has happened since the Great Recession in 2009. Given that boosting business investment was the primary stated goal of the Tax Cuts and Jobs Act (TCJA) passed in 2017, this seems like an unambiguous policy failure.:
• On its second anniversary, the TCJA has cut taxes for corporations, but nothing has trickled down

Labor standards

• The Trump administration has systematically weakenedworkers' rights
• More than eight million workers will be left behind by the Trump overtime rule
• New Trump administration joint-employer rule has $1 billion price tag for workers
• Workers will lose more than $700 million annually under proposed Trump DOL rule 
• Graduate student workers' rights to unionize are threatened by Trump administration proposal

Housing

• The Trump administration's new housing rules will worsen segregation

Immigration

• Trump and Kushner's 'merit-based' immigration plan fails to propose the smart reforms needed to modernize and improve U.S. labor migration
• Trump's national emergency declaration over the border wall is dangerous and not justified by the facts
• Congress and Trump discover bipartisanship on immigration—but only to increase H-2B visas for captive and underpaid migrant workers

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China is closing gap with United States on research spending

https://www.nature.com/articles/d41586-020-00084-7

China's per-capita spending on research and development is close to overtaking that of the United States.Credit: Qilai Shen/Bloomberg/Getty

The gap in research and development (R&D) funding between the United States and China is closing fast, despite modest increases in US funding since 2000, according to statistics assembled by the US National Science Foundation (NSF).

The United States is increasingly "seen globally as an important leader rather than the uncontested leader" in science and engineering, the agency said in the latest edition of its biennial Science and Engineering Indicators report, which compiles metrics on the state of science and engineering in the country.

From 2000 to 2017, R&D spending in the United States grew at an average of 4.3% per year, found the report, which the NSF released on 15 January. But spending in China grew by more than 17% per year during the same period. Several other countries, including Germany and South Korea, also increased their spending at rates that outstripped that of the United States, but they remain solidly behind the two global leaders in terms of total funding. The United States accounted for 25% of the US$2.2 trillion spent on R&D worldwide in 2017, and China made up 23%.

Preliminary data from 2019 suggest that China has already surpassed the United States in R&D spending, said Julia Philips, chair of the National Science Board's science and engineering policy committee, during a press briefing. The board oversees the NSF and produces the Indicators reports.

Source: National Science Foundation

The emergence of other innovation powerhouses "can only be good", says Diane Souvaine, a computer scientist at Tufts University in Medford, Massachusetts. "New knowledge benefits everyone."

Souvaine, who chairs the National Science Board, notes that the United States still leads the world in many important metrics, such as total investment in R&D, proportion of highly cited publications and enrolment of internationally mobile students.

Julia Lane, an economist at New York University, objects to the NSF's use of spending as the pre-eminent metric for measuring the strength of the US science and engineering community. Instead of worrying about spending, she says, policymakers should be thinking about whether the dollars are being spent wisely. Lane also says that the continued attraction of foreign-born students and workers to the United States is "a good signal that good science is being done here".

Enrolment dip

But the NSF report found signs that this signal might be changing. The number of foreign-born students enrolling in US universities has declined by about 4% since 2016. And the retention rates for Chinese and Indian citizens who earn doctoral degrees in the United States have decreased by 9 and 5 percentage points, respectively, since 2003.

Shulamit Kahn, an economist at Boston University in Massachusetts, suspects that the tightening of US immigration policies, as well as increasingly strong university programmes in China and elsewhere, are the root causes of these declines.

At the same time, the global movement of researchers is opening up avenues for increased international scientific collaboration. Nearly 40% of scientific papers published by US authors in 2018 included foreign co-authors, up from 19% in 2000. Chinese scientists contributed to more than one-quarter of these manuscripts.

"The US–China relationship is the most important international scientific collaborative relationship we have right now," says Kei Koizumi, a former senior adviser in science policy at the American Association for the Advancement of Science in Washington DC. It's more appropriate, he continues, "to think of China as a collaborator than as an adversary".

Increasing diversity

The NSF report also found that US laboratories have become more diverse, by some measures. The participation of women and members of under-represented minorities in the science and engineering workforce has increased across the board since 2003, especially in the life sciences, psychology and the social sciences. However, because the total science and engineering workforce has also increased significantly over this period, the proportion of women in some disciplines, such as computer sciences and mathematics, has stagnated or even slightly decreased.

Molly King, a sociologist at Santa Clara University in California, says she is "not terribly surprised by any of the statistics" regarding diversity in the workforce. She cites several factors, including negative stereotyping and disparities in the rates at which women's papers are accepted and cited, which contribute to the persistence of the participation gap.

Furthermore, King says, owing to the differences in pay between science and engineering jobs and positions in other fields, this continued under-representation "has important implications for the gender (and racial) wage gaps and differential economic well-being". According to the Indicators report, the 2017 median salary for workers in science and engineering occupations was $85,390, more than double that for all workers ($37,690).

Koizumi thinks the report offers a clear road map of steps that the United States needs to take to remain competitive in global science and engineering: further investment in science, technology, engineering and maths education; increased inclusion of people from under-represented groups; and continued funding of science and engineering R&D. "It's all right there," he says.