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Tue, 19 Jun 2018 18:46:44 +0000
U.S. military budget inches closer to $1 trillion mark, as concerns over federal deficit grow
The U.S. Senate on Monday voted to give the military $716 billion for 2019, approving one of the biggest defense budgets in modern American history despite concerns from some economists and lawmakers about the rapidly rising federal deficit. The 2019 military budget, approved by an overwhelming 85 to 10 margin, gives America's armed forces a substantial $82 billion […]

Homeland Security Secretary Kirstjen Nielsen this month. (Olivier Douliery/Pool/Getty Images)

The Trump administration's hard-line immigration policies are predicated, in part, upon the notion that immigrants who are in the country illegally represent a threat to public safety.

The White House, for instance, has sent out regular email blasts to reporters with alarmist accounts of crime committed by undocumented immigrants. President Trump has frequently exaggerated the threat posed by MS-13, a criminal gang originating in Los Angeles whose members tend to be from Central American countries. On Tuesday he wrote on Twitter, without evidence, that Democrats "don’t care about crime and want illegal immigrants, no matter how bad they may be, to pour into and infest our Country, like MS-13."

But the social-science research on immigration and crime is clear: Undocumented immigrants are considerably less likely to commit crime than native-born citizens, with immigrants legally in the United States even less likely to do so. A number of studies published in the past several months clearly illustrate the consensus.

The first study, published by the libertarian Cato Institute in February, examines criminal conviction data for 2015 provided by the Texas Department of Public Safety. It found that native-born residents were much more likely to be convicted of a crime than immigrants in the country legally or illegally.

"As a percentage of their respective populations, there were 56 percent fewer criminal convictions of illegal immigrants than of native-born Americans in Texas in 2015," author Alex Nowrasteh writes. "The criminal conviction rate for legal immigrants was about 85 percent below the native-born rate."

The data shows similar patterns for violent crimes such as homicide and property crimes such as larceny. The study did find that immigrants in the United States illegally were more likely than native-born people to be convicted of "gambling, kidnapping, smuggling, and vagrancy." But as those crimes represented just 0.18 percent of all convictions in Texas that year, they had little effect on overall crime rates.

Another study, published in March in the journal Criminology, looked at population-level crime rates: Do places with higher percentages of undocumented immigrants have higher rates of crime? The answer, as the chart above shows, is a resounding no.

States with larger shares of undocumented immigrants tended to have lower crime rates than states with smaller shares in the years 1990 through 2014. "Increases in the undocumented immigrant population within states are associated with significant decreases in the prevalence of violence," authors Michael T. Light and Ty Miller found.

That's just a simple correlation, of course, and it's well documented that many factors beyond immigration can affect the crime rate. So Light and Miller ran a number of statistical analyses to more clearly isolate the effects of illegal immigration from those other factors. Among other things, they find that the relationship between high levels of illegal immigration and low levels of crime persists even after controlling for various economic and demographic factors such as age, urbanization, labor market conditions and incarceration rates.

All told, Light and Miller sliced the data 57 ways to see whether there was anything they missed, but not one of their analyses showed any positive relationship between illegal immigration and crime. They concluded that not only does illegal immigration not increase crime, but it may actually contribute to the drop in overall crime rates observed in the United States in recent decades.

"Our study calls into question one of the primary justifications for the immigration enforcement build


Tue, 19 Jun 2018 14:31:01 +0000
Two charts demolish the notion that immigrants here illegally commit more crime
The Trump administration's hard-line immigration policies are predicated, in part, upon the notion that immigrants who are in the country illegally represent a threat to public safety. The White House, for instance, has sent out regular email blasts to reporters with alarmist accounts of crime committed by undocumented immigrants. President Trump has frequently exaggerated the […]

There are more than 393 million civilian-owned firearms in the United States, or enough for every man, woman and child to own one and still have 67 million guns left over.

Those numbers come from the latest edition of the global Small Arms Survey, a project of the Graduate Institute of International and Development Studies in Geneva.

The report, which draws on official data, survey data and other measures for 230 countries, finds that global firearm ownership is heavily concentrated in the United States. In 2017, for instance, Americans made up 4 percent of the world's population but owned about 46 percent of the entire global stock of 857 million civilian firearms.

With an estimated 120.5 guns for every 100 residents, the firearm ownership rate in the United States is twice that of the next-highest nation, Yemen, with just 52.8 guns per 100 residents. In raw number terms, the closest country to the United States is India, with 71.1 million firearms in circulation. These numbers do not include firearms owned by law enforcement agencies or militaries.

On gun ownership, the United States stands out among the world's wealthiest nations, with an ownership rate more than three times higher than the rate in the next-highest country, Canada. The gun ownership rate in the United States is more than six times higher than the average among similar wealthy nations in the Organization for Economic Cooperation and Development.

The Obama years were a boom time for America's gun manufacturers, which doubled their annual output between 2009 and 2013, fueled in part by fears of a federal crackdown on gun ownership that never materialized. “In the United States alone civilians acquired at least 122 million new or imported firearms during the period 2006–17,” the Small Arms Survey found.

If global gun ownership is concentrated in American hands, American gun ownership is concentrated even more narrowly in the country's gun-owning households. As of 2017, Gallup found that 42 percent of American households reported owning guns. With an estimated 118 million households in the United States, per the U.S. Census, that would mean that the country's 393 million guns are distributed among 50 million households. The implication is that the average gun-owning household owns nearly eight guns.

A separate Harvard-Northeastern study published in 2016 found that 3 percent of American adults (individuals in this case, not households) own half the nation's firearms. Combined with the latest Small Arms Survey estimate, that would mean that 3 percent of American adults own nearly one quarter of the world's civilian firearms stockpile. It's worth noting, however, that the Harvard-Northeastern study, which was based on a survey of gun owners, estimated a much lower number of guns in circulation: 265 million as of January 2015.

Because there is no official tally of American gun ownership, there's a margin of error around any estimate of either gun ownership or the number of guns in circulation. Some gun owners may be disinclined to answer survey questions, for instance, which would result in an undercount of the number of households and individuals owning guns.

Similarly, any estimate of the number of guns in circulation has to make an assumption about attrition — the number of firearms that are destroyed or otherwise become unusable in any given year. The number of guns in circulation could be subject to overcount or undercount, depending on how researchers model the effects of attrition.

Regardless, the big-picture trends are not in dispute. Measured in rates or in raw terms, the United States is the civilian gun capital of the world.


Tue, 19 Jun 2018 12:24:30 +0000
There are more guns than people in the United States, according to a new study of global firearm ownership
There are more than 393 million civilian-owned firearms in the United States, or enough for every man, woman and child to own one and still have 67 million guns left over. Those numbers come from the latest edition of the global Small Arms Survey, a project of the Graduate Institute of International and Development Studies in […]

Apeel avocados, now on sale at some Costco stores, have twice the shelf life of untreated avocados. (Courtesy of Apeel Sciences)

The new avocados rolling out to Midwest Costco stores this week don’t look like the future of fresh produce. But they’re testing technology that could more than double the shelf life of vegetables and fruits.

That technology, developed by the start-up Apeel Sciences, consists of an invisible, plant-based film that reinforces the avocados’ own skin. The company hopes to expand to stores nationwide — as well as to a range of other produce.

Experts say the product, which has quadrupled shelf life in a lab setting, has the potential to make foods less perishable — with huge boons for consumers, the environment and the food industry.

Fresh fruit and vegetables account for more than 40 percent of wasted food in the United States, according to the food waste coalition ReFED. Apeel and other companies are working on technologies that could help slash those figures, and enable produce to travel farther and with less refrigeration, improving quality, selection and carbon footprint.

“Already, we’re able to bring avocados to places that didn’t have access to top-quality before, or that often ran out,” said James Rogers, Apeel’s chief executive. “It’s so rewarding to me personally to bring this fruit to places that wouldn’t normally have that access.”

Apeel works much like the skins and peels on many types of produce. Made from cellular material extracted from plants, the semipermeable film adheres to the outside of the avocado and slows the rate at which it loses water and carbon dioxide and absorbs oxygen.

Fresh produce spoils as it respires, which is why packers and distributors chill produce or spray it with coats of wax. Unlike wax, Apeel is designed to optimize water and oxygen exchange, boosting quality and shelf life, Rogers said.

A time lapse of untreated strawberries, top, and strawberries treated with Apeel. (Courtesy Apeel Sciences)

Consumers won’t pay more for Apeel produce, he added, because retailers who use it save money by reducing their losses from spoilage.

“The way we’re set up, it’s more expensive for them not to use the product,” Rogers said.

Few dispute the notion that waste represents an enormous cost to the food industry. According to ReFED, the United States wastes roughly 63 million tons of food each year, 40 percent of that in grocery stores and restaurants. ReFED estimates that reducing fruit and vegetable waste would represent an $18.2 billion opportunity for retailers.

Extending shelf life, experts say, could also avoid wasting water and fertilizer on food that consumers will never eat.

“The opportunity for Apeel is in addressing the 42 percent of overall waste that’s fruits and vegetables,” said Chris Cochran, executive director of ReFED. “And that could be incredibly significant.”

Down the line, Apeel’s technology could have other benefits: improving the selection of fresh produce or reducing the need for refrigeration. The company has experimented with a film for tomatoes, which are typically picked and shipped long before ripeness to arrive fresh at stores. A longer shelf life could mean they remain on the vine, absorbing flavor and nutrients, far longer.

Apeel has received significant funding from the Bill and Melinda Gates Foundation to develop a film for cassava, a staple crop in Africa, and has tested a version for mangoes and bananas as part of a Rockefeller Foundation project in Eastern Kenya. Places such as Kenya lack reliable, refrigerated supply chains, which causes them to lose large portions of their harvests,  said Betty Kibaara, an associate director at the Rockefeller Foundation. Apeel can "greatly contribute" to reducing those losses, she added, which is why her organization has embraced it.

Apeel is currently awaiting regulatory approval in Nigeria and Kenya. Closer to home, Rogers said, Apeel will let farmers ship niche products — such as finger limes — to more distant and profitable markets.

A time lapse of untreated green beans, left, and green beans treated with Apeel. (Courtesy of Apeel Sciences)

Experts said Apeel's promises have potential, even if it’s too early to evaluate them.

“I think we’ll have to wait and see if all these things pan out,” said Kathleen Merrigan, the head of the Food Institute at George Washington University and the former deputy secretary of agriculture under the Obama administration. “But we know that all Americans need to increase their fruit and vegetable intake. Anything that makes that supply chain more efficient and cost effective is great.”

For now, Apeel is focused on shipping its avocados to more stores — and expanding the range of fruits and vegetables that use its technology. Within the year, Rogers said, he hopes to have Apeel avocados in Costco stores nationally.

The company has also developed skins for strawberries, bananas, mangoes, peaches, pears, nectarines, green beans, citrus fruits and asparagus. It expects citrus and asparagus will be the next Apeel products on the market.

Dozens of other companies are working on their own “shelf life extension solutions” — though none with quite the funding of Apeel. According to Crunchbase, the company has received $40 million from Andreessen Horowitz and DBL Partners, as well as the Rockefeller and Gates foundations.

One promising initiative called FreshPaper uses sheets of treated paper, placed in salad bags and produce bins, to inhibit bacterial and fungal growth, ReFED’s Cochran said.

And a Canadian company has developed a spray for retailers to extend the shelf life of produce, said Carol Culhane, a food technology consultant.

“It’s become a bit of a movement,” Culhane said. “We’re getting to a turning point — so many companies are beginning to say ‘we need to do something about this.’ ”

Read more:

The Silicon Valley food start-up best known for its vegan mayo thinks it can cure malnutrition in Africa

We think fresh is best. But to fight food waste, we need to think again.

The hot new trend in food is literal garbage


Tue, 19 Jun 2018 09:00:16 +0000
This start-up can make avocados last twice as long before going bad
The new avocados rolling out to Midwest Costco stores this week don’t look like the future of fresh produce. But they’re testing technology that could more than double the shelf life of vegetables and fruits. That technology, developed by the start-up Apeel Sciences, consists of an invisible, plant-based film that reinforces the avocados’ own skin. […]

Washington Post illustration/iStock

In the midst of the opioid crisis, Boston Medical Center added an intravenous version of Tylenol to its arsenal of drugs for pain management. But IV Tylenol was expensive, and after drugmaker Mallinckrodt Pharmaceuticals increased the price, the hospital projected it was on track to spend $750,000 in 2015 on acetaminophen (the active ingredient in Tylenol) in injectable form.

"It was going to cost us, without the intervention that happened, more than any other drug on our formulary. Think of the most expensive cancer drug,” said David Twitchell, Boston Medical Center’s chief pharmacy officer. “To me, that didn’t seem justified.”

A typical dose of acetaminophen in tablet form costs pennies, but the IV version, called Ofirmev, is $40 for a 1,000-milligram dose.

Hospitals throughout the country are working to shift away from opioids, whose addictive properties have spawned a public health crisis.

Recent IV formulations of old drugs such as acetaminophen may present new options in managing pain while fighting the opioid crisis, but a growing body of evidence — including a new study — suggests that IV acetaminophen appears to offer little or no benefit over taking the same drug in pill form for many conditions. There are also studies that suggest a modest benefit, but many hospitals have limited access to the drug to patients who are incapable of taking oral medications due to its high cost and the inconsistent evidence of a clear advantage.

The rapid uptake of IV acetaminophen, which accounted for more than $300 million in sales last year for Mallinckrodt, reveals how new drugs can ride a wave of novelty and marketing before their best real-world uses are fully understood. 

The study, published in the July issue of the journal Anesthesiology and based on seven years of claims data for bowel surgeries from 602 hospitals, found that IV acetaminophen appeared no better in reducing opioid use than taking the medicine orally.

“It just seems very often, physicians have magical thinking about a new preparation of an old drug,” said Andrew Leibowitz, system chair of the department of anesthesiology, perioperative and pain medicine at the Icahn School of Medicine at Mount Sinai, who co-authored the study. “Doctors do seem, in general when a patient is in the hospital, to favor IV medications as a knee-jerk reflex, even when equally effective oral medications are available.”

In a statement, Mallinckrodt dismissed the study as "significantly flawed" and pointed to journal articles that found IV acetaminophen associated with reduced hospital costs and decreased opioid use. The company pointed out that half of the patients who received IV acetaminophen in the colon surgery study received only one dose — only a quarter of the federally approved dose.

But that data reflects how hospitals are using the drug in the real world. Boston Medical Center was able to rein in its use of IV acetaminophen, partly by allowing only a single dose after surgery unless doctors sought further authorization.

"Based on the review evidence available, it doesn’t seem like the IV formulations are significantly better than oral formulations of these medications," said Will Vincent, a clinical pharmacy specialist for Boston Medical Center. "For some of our patients who are critically ill, if we’re not able to use oral medications, we're forced to use the injectable route."

Other IV formulations of generic painkillers exist — and more are expected to become available. Steven Lucio, associate vice president at the Center for Pharmacy Practice Excellence at Vizient, a company that negotiates contracts for drugs and medical supplies for hospitals each year, said that health-care providers will have to decide whether these more expensive drugs are truly more valuable.

"Just putting acetaminophen in an IV form doesn’t seem to correlate with a huge, demonstrable benefit that is repeatable," Lucio said. "Some studies show a little bit of benefit; some studies don’t show benefit."

Leibowitz and a co-author, Jashvant Poeran, said that because drug approvals are based on specific clinical trials, they do not always capture all the challenges of using a drug in real-world circumstances.

The team found that pain-management practices were startlingly variable, even for relatively routine surgery. That could reflect the still-evolving scientific and medical understanding of how to treat pain.

Erin Krebs, a staff physician at the Minneapolis Veterans Affairs Health Care System, led a study published in the Journal of the American Medical Association earlier this year that found opioids were no better at managing chronic back pain or hip and knee pain than non-opioid pain treatments. She said that physicians are, for good reasons, rethinking their use of opioids, but the urgency to use alternatives could make them susceptible to a pitch about a new drug, whereas older medicines don't typically have a sales force behind them.

"I think part of the reason we got into such a mess with opioids was really a lack of training and understanding of pain management," Krebs said. "It’s a symptom of how little research we've done on the appropriate management of these really common conditions. These are some of the most common human ailments, and they have not received enough research attention, research funding or education."

Read More:

As the opioid epidemic rages, the fight against addiction moves to an Ohio courtroom

More than a third of American adults take prescription drugs linked to depression, study says

Opioid prescriptions fell 10 percent last year, study says


Mon, 18 Jun 2018 17:38:53 +0000
The growing case against IV Tylenol, once seen as a solution to the opioid crisis
In the midst of the opioid crisis, Boston Medical Center added an intravenous version of Tylenol to its arsenal of drugs for pain management. But IV Tylenol was expensive, and after drugmaker Mallinckrodt Pharmaceuticals increased the price, the hospital projected it was on track to spend $750,000 in 2015 on acetaminophen (the active ingredient in Tylenol) in injectable form. […]

Migrants taken into custody related to cases of illegal entry into the United States rested under solar blankets at a facility in McAllen, Tex., on Sunday. (U.S. Customs and Border Protection's Rio Grande Valley Sector/AP) 

Attorney General Jeff Sessions says the Trump administration's tough approach on illegal immigration is the result of a crisis: a mass influx of people coming in over the country's southwestern border.

“We are not going to let this country be overwhelmed,” Sessions said in a May 7 speech  announcing a new "zero-tolerance" policy on southwestern border crossings. "People are not going to caravan or otherwise stampede our border."

Among the effects of that policy is a surge in the number of undocumented children at the border who have been separated from families as their parents are accused of and being prosecuted for illegal immigration. That has led to children being detained in cages and tent cities, reports of staff members being prevented from physically comforting small children and distraught parents killing themselves in detention centers.

But while all this is happening in the name of deterring a “stampede” at the border, federal data reveals the stampede is not happening.

The harsh new rules are necessary because of “massive increases in illegal crossings in recent months,” Sessions said in May. He then laid out some numbers. “This February saw 55 percent more border apprehensions than last February,” he said. “This March saw triple the number from last March. April saw triple the number last April.”

Strictly speaking, the year-over-year figures Sessions cites are accurate. But Customs and Border Protection's own data — showing migrant apprehensions at the southwestern border remain near historic lows -- severely undercut these claims. Border apprehensions are up year-over-year in part because they dropped dramatically in the first few months of Trump's term. And they remain very low by historic standards, as this chart of CBP's monthly Southwest border apprehension data shows.

Throughout much of the 2000s, monthly apprehension totals in the neighborhood of 100,000 people or more were not uncommon. But the last time apprehensions were at that level was more than a decade ago, in 2007.

This chart, showing calendar year-to-date apprehensions for 2000 through 2018, makes that even clearer. The “massive increase” in crossings this year brought apprehensions up to a level not seen since .


Mon, 18 Jun 2018 14:15:30 +0000
Sessions says family separation is ‘necessary’ to keep the country from being ‘overwhelmed.’ Federal immigration data says otherwise.
Attorney General Jeff Sessions says the Trump administration's tough approach on illegal immigration is the result of a crisis: a mass influx of people coming in over the country's southwestern border. “We are not going to let this country be overwhelmed,” Sessions said in a May 7 speech  announcing a new "zero-tolerance" policy on southwestern border […]

(iStock)

Once ubiquitous in everything from frozen pizza to coffee creamer to popcorn, artificial trans fats are — as of Monday — banished from U.S. restaurants and grocery stores.

Food-makers have had three years to phase out the ingredient, which the Food and Drug Administration ruled unsafe to eat in 2015. Nutrition researchers and public health advocates long ago found artificial trans fats, a modified form of vegetable oil, raised “bad” cholesterol and contributed to heart disease.

That prompted a wave of voluntary recipe changes at food companies, and trans fat consumption has plummeted over the past decade. But the June 18 deadline marks a final chapter in the U.S. fight against trans fats at a time when other countries are beginning to contemplate a similar change.

“The elimination of artificial trans fat from the food supply represents a historic and long-fought victory for public health,” said Michael F. Jacobson, the former executive director of the nonprofit Center for Science in the Public Interest, in a statement to mark the occasion. “Ridding the food supply of partially hydrogenated oils will save tens of thousands of lives each year.”

Scientists developed the method for modifying oils in the early 20th century, but food-makers didn’t deploy them until the 1950s and ’60s when they needed ways to lengthen shelf life and improve the texture of processed food products.

But in the early 1990s, research began turning up powerful links between artificial trans fats, cholesterol and heart disease. (Studies have not established a connection between those conditions and the natural trans fats that occur in some animal proteins.)

Artificial trans fats are made in an industrial process that injects hydrogen atoms into molecules of vegetable fat, changing their chemical structure. For reasons scientists don't entirely understand, these altered molecules prompt the body to produce more bad cholesterol — among other possible problems.

As the scientific consensus grew, the FDA required food companies to disclose artificial trans fats on product labels in January 2006. Nine years later,  the agency ruled that artificial trans fats are not safe in food and set a June 2018 deadline for their removal from the food system.

Food companies cut trans fats 86 percent between 2003 and 2015, according to the Grocery Manufacturers Association, and expended hundreds of thousands of hours tweaking foods from Jell-O to Wheat Thins. Food companies made further reductions between 2015 and 2018, removing 98 percent of trans fats from the food supply, said Brian Kennedy, a GMA spokesman.

But the transformation hasn’t been easy. Some products, such as popcorn and pie crust, proved more stubborn to reinvention. Companies have also complained to FDA that they should be allowed to continue using trans fats in limited circumstances — such as to enhance product flavors or grease industrial baking pans.

FDA agreed in May to give companies one more year to find another ingredient for those purposes. The agency has also said that, while new products can no longer be made with trans fats, they'll give foods already on the shelves some time to cycle out of the market. But food makers and public health advocates agree that artificial trans fats are effectively no more.

“I would have preferred [FDA not give] the one-year extension because manufacturers have had plenty of time to eliminate the use of trans fat,” said Walter Willett, the Harvard University nutrition professor whose research first surfaced the problems with trans fats. “However, these are small enough that we can say that industrial trans fat has been removed from our food supply.”

Willett says that could slash the rates of preliminary death from heart disease, and reduce the incidence of diabetes, dementia and other metabolic diseases. Such declines have been observed in New York City, which banned the use of partially hydrogenated oils in restaurants in 2007, and in Denmark, which became the first country to ban trans fats in 2003.

Public health officials are looking to other countries to take similar steps, particularly in the developing world. In May, the World Health Organization urged countries to eliminate trans fats from their food supplies, citing the risk of cardiovascular disease.

“Several high-income countries have virtually eliminated industrially-produced trans fats through legally imposed limits on the amount that can be contained in packaged food,” the agency said in a statement. “Action is needed in low- and middle-income countries .


Fri, 15 Jun 2018 19:07:52 +0000
Artificial trans fats, widely linked to heart disease, are officially banned
Once ubiquitous in everything from frozen pizza to coffee creamer to popcorn, artificial trans fats are — as of Monday — banished from U.S. restaurants and grocery stores. Food-makers have had three years to phase out the ingredient, which the Food and Drug Administration ruled unsafe to eat in 2015. Nutrition researchers and public health […]

Judge Richard Leon's opinion allowing the merger of AT&T and Time Warner to proceed offers little if any useful precedent and will delay even further the development of effective competition policy for the high-tech economy. (Michael Nagle/Bloomberg)

Among economists, business executives and consumers, it is now well understood and widely accepted that a handful of large firms have been allowed to gain too great a control over too many industries, raising prices, reducing choice, eroding service, invading privacy and allowing the shareholders, executives and employees of those firms to earn higher incomes than they would in a genuinely competitive marketplace.

Nowhere is this tendency toward excessive consolidation more apparent than in telecom and media, where rapid technological change, huge economies of scale and our natural inclinations to be part of the same networks has created monopolies and winner-take-all competition. These developments have revealed the inadequacy of our antitrust law, whose statutes and case law were meant to deal with a manufacturing economy of an earlier era.

In the past year, Richard J. Leon, a senior judge of the U.S. District Court in Washington, had the opportunity to update the antitrust law to deal with the competitive realities of a new era. The vehicle was the government’s challenge of an $85 billion merger between AT&T, which provides phone, Internet, video and data services, with Time Warner, owner of Warner Bros., the venerable producer of movies and TV shows, and cable networks CNN, HBO and Turner Broadcast Network, home to the NCAA Final Four basketball tournament and Major League Baseball.

Richard J. Leon, a senior judge of the U.S. District Court in Washington. (AP Photo/U.S. District Court for the District of Columbia)

Together, the two companies can count as customers practically every household in America. Leon’s challenge was to determine whether, as the government alleged, the combination of a major producer of content with an even bigger distributor of content could substantially lessen competition in the media marketplace.

Unfortunately, as we discovered Tuesday, Leon was not up to the task. What he produced, instead, was a 172-page hatchet job that was selective and biased in its use of the evidence, stubbornly hidebound in its analysis and ignorant of economic theory and business practice. His opinion allowing the merger to proceed offers little if any useful precedent and will delay even further the development of effective competition policy for the high-tech economy.

This is not to say that there weren’t good reasons to dismiss the government’s case.

Leon could have reasonably concluded that the technology and industry structure and economics were now changing so quickly that it is too early to tell whether a merger would be more likely to increase or decrease competition and that the government should stand back and let things work themselves out in the marketplace.

Similarly, he might have approved the deal but imposed the same conditions he himself approved seven years ago in another “vertical” merger, that of cable giant Comcast and content producer NBC/Universal. Under that decree, which reflected the Obama-era policy of “net neutrality,” Comcast was prohibited from using its control over Internet access to deny or disadvantage the distribution of competitive content from other producers, and NBC agreed not to charge unreasonable prices to rival distributors for its “must-have” content. In his opinion, Leon repeatedly cited the fact that Comcast hasn’t raised cable prices as a reason we shouldn’t fear a combination between another content producer and distributor, without ever raising the issue of whether similar conditions need be applied.

Indeed, it is curious that in 172 pages, Leon takes no judicial notice of lots of obvious things, such as that three or four companies now dominate the markets for wireless phone service, cable television and high-speed Internet access, or that there are extremely high barriers for any new company to enter those markets, or that prices in those markets are generally are higher than in other countries.

He puts much emphasis on the competition that Facebook and Google have brought to the advertising market without even a hint of recognition that they are basically monopolies that daily mock the antitrust law. Nor does it occur to him that, because competition is so imperfect, the $1.5 billion a year in cost savings that AT&T foresees from the merger might not make its way to consumers in the form of lower prices or better service.

Leon declares, incorrectly, that video content producers and packagers such as Hulu, Netflix and Amazon Prime are themselves now “vertically integrated” because they can use the Internet to bypass cable companies, apparently oblivious to the fact that it is cable companies and phone companies like AT&T that provide Internet access.
Nor does he share any convincing logic or evidence to conclude that a combined AT&T/Time Warner would never, ever want to use its control over Internet access to shut out or disadvantage content from rivals.

Cherry-picking evidence is the last refuge of the judicial scoundrel, and Leon is a master scoundrel. He devotes tens of pages to dismissing and ridiculing the testimony of the government’s main economic witness, Carl Shapiro, a former top economist in the Justice Department’s antitrust division and member of the White House Council of Economic Advisers, on the key issue in the case — whether a combined company would gain sufficient negotiating leverage with cable companies to raise prices for must-have channels CNN, HBO and TBS.

And then he turns around and relies on other portions of Shapiro’s testimony when it conveniently supports his own conclusions on other issues. In a similar vein, the judge relies on the testimony of AT&T competitors and customers when it serves his purposes but gratuitously dismisses it as self-interested tripe when it does not.

Contrast that with the deference Leon gave to the testimony of Randall Stephenson, AT&T’s chief executive, concerning the personal notes he brought to the boardroom on the day he asked directors to approve the Time Warner deal.

“How can you advantage your own distribution (TV, [Broadband], Wireless) without harming TW [Time Warner’s] position as a wide distributor of content to … cable networks and broadcast networks,” read the note discovered by government lawyers.

Asked about the notes at trial, Stephenson explained that the point he was making was that AT&T couldn’t use the merger to gain extra leverage with customers in that manner. My guess is that there isn’t a traffic court judge in America who would have fallen for that explanation, but Senior Judge Richard J. Leon did.

Indeed, Leon’s opinion oozes with empathy for legacy companies like AT&T and Time Warner that are suddenly bleeding advertising revenue to Facebook and Google and bleeding viewers to Netflix and Amazon.

In his opinion, Leon reminds us that Turner Broadcasting expects that its annual domestic subscription revenue growth will decrease to the low single digits between 2018 and 2022 and that this will come at the very time that increased competition for the best actors and directors is driving up the cost of production, squeezing profit margins. We can’t let that happen now, can we?

One standard question in merger analysis is whether the two firms could achieve efficiencies or competitive advantage through contractual cooperation rather than permanently merging. In exchange for Time Warner giving AT&T data on consumer viewing habits, for example, AT&T could give Time Warner cheaper or better access to consumers. Citing “bargaining friction” (whatever that means), Leon dismisses that possibility out of hand.

A careful judge would have also considered whether all that competition coming from upstarts with new technology and new business models might get snuffed out if the industry is allowed to restructure itself into three or four vertically integrated giants like Comcast-NBC and ATT/Time Warner, making it all but impossible for a small firm to enter the industry at only one point along the chain of production and distribution. Nothing from Leon on that.

Throughout his opinion, he ridicules the government for its failure to produce “real world evidence” that a merged AT&T and Time Warner would use its scale and scope to raise prices for rivals or exclude them from the market, as if such definitive proof were even possible. Antitrust law, by its nature, requires judges to speculate about the future based on credible theories, supported by experience, of how profit-maximizing firms behave in a market with specific structures and competitive dynamics. Instead, Leon approached the task much as he would a criminal price-fixing case, pretending to look with an open mind for the hard evidence that he knew could never be found.

Every lawyer I spoke with this week agreed that, in the matter of U.S. v. AT&T, the Justice Department put forward a bad case, and as the old admonition warns, wound up creating bad law. Appealing the decision may never unscramble the merger, but it would allow the department to erase the unfortunate precedent set by this lousy bit of jurisprudence.

Read more: 


Fri, 15 Jun 2018 18:02:30 +0000
How Judge Leon blew it with U.S. v AT&T
Among economists, business executives and consumers, it is now well understood and widely accepted that a handful of large firms have been allowed to gain too great a control over too many industries, raising prices, reducing choice, eroding service, invading privacy and allowing the shareholders, executives and employees of those firms to earn higher incomes […]

President Trump has touted a strong economy, but one measure shows the value of wages has decreased for most American workers. (Jeff Swensen/Getty Images)

The average hourly wage paid to a key group of American workers has fallen from last year when accounting for inflation, as an economy that appears strong by several measures continues to fail to create bigger paychecks, the federal government said Tuesday.

For workers in “production and nonsupervisory” positions, the value of the average paycheck has declined in the past year. For those workers, average “real wages” — a measure of pay that takes inflation into account — fell from $22.62 in May 2017 to $22.59 in May 2018, the Bureau of Labor Statistics said.

This pool of workers includes those in manufacturing and construction jobs, as well as all “nonsupervisory” workers in service industries such health care or fast food. The group accounts for about four-fifths of the privately employed workers in America, according to BLS.

Without adjusting for inflation, these “nonsupervisory” workers saw their average hourly earnings jump 2.8 percent from last year. But that was not enough to keep pace with the 2.9 percent increase in inflation, which economists attributed to rising gas prices.

“This is very likely because of the spike in oil prices eating into inflation-adjusted earnings,” said Allen Sinai, chief global economist and strategist at Decision Economics. “We pay for energy-related costs out of our wages, out of our compensation. And it's making a real impact.”

The fall in those wages has alarmed some economists, who say paychecks should be getting fatter at a time when unemployment is low and businesses are hiring.

“This is odd and remarkable,” said Steven Kyle, an economist at Cornell University. “You would not normally see this kind of thing unless there were some kind of external shock, like a bad hurricane season, but we haven't had that.”

The falling wages promise to exacerbate historic levels of U.S. inequality. Within the labor force, it means workers who were already making less are falling further behind. And if private laborers as a whole are seeing their earnings flatten while the economy as a whole grows at an annual rate of more than 2 percent, that means the gains are going almost exclusively to people already at the top of the economic ladder, economists say.

“The extra growth we are seeing in the economy is going somewhere: to capital owners and people at the top of the income distribution,” said Heidi Shierholz, director of policy at the Economic Policy Institute and a former chief economist at the Labor Department, noting workers' share of corporate income remained relatively low as of January. “And what we've seen is in recent period a much higher share of total income earned going to owners of capital.”

Stephen Moore, a conservative economist at the Heritage Foundation and campaign adviser to President Trump, said the figures were troubling. But he added that the drop in real wages could be a reflection of the economy adding low-end jobs, rather than declining values further up the chain. If so, he said, that would be a sign of economic vitality, as the economy pulled in unemployed workers.

But other experts doubted that argument. “For that to be true, you'd have to see that the jobs coming back are particularly low-wage jobs,” said Elise Gould, an economist at the Economic Policy Institute, a left-leaning think tank. “There was some evidence of that initially in the recovery, but I don't think the evidence supports the idea.”

But why is wage growth so tepid?

This problem is not new: Slow wage growth bedeviled the Obama administration, as well.

Economists broadly disagree about the cause of persistently weak wage growth, offering a variety of possible explanations.

Ernie Tedeschi, a former treasury official under President Barack Obama, said the unemployment rate may create a misleadingly positive impression of the health of the jobs market, given how many Americans dropped out of the labor force during the Great Recession.

Weaker union rights for workers may also be cutting into their ability to force pay increases from their bosses, said Jared Bernstein, who served as an economic adviser to Vice President Joe Biden.

Trump officials pointed to what they called a strong growth in private business investment in the first quarter of 2018, after the tax law's passage, and expressed optimism that the law would translate into higher wages for workers in the near future. They also dismissed the allegation that the data disproved their claim that the tax law would raise the average worker's wage by $4,000.

“The law is just six months old,” said DJ Nordquist, chief of staff for Trump's Council of Economic Advisers, in an email. “Our estimates [of the tax law's benefits] were for 'steady state' — when the full effects of the law spread throughout the economy, which will take years, as we always said it would.”

But to Democrats, the tepid wage growth helps bolster their claim that the Republican tax law was overwhelmingly geared toward the wealthy and that a more direct role for the federal government is needed to help workers.

“Today, while the cost of health care, prescription drugs, gasoline and housing soar, the average worker, according to the Bureau of Labor Statistics, is now making slightly less than he or she made one year ago after adjusting for inflation,” Sen. Bernie Sanders (I-Vt.) said in an email to The Washington Post, arguing for a higher minimum wage and a single-payer health-care plan.


Fri, 15 Jun 2018 17:59:59 +0000
For the biggest group of American workers, wages aren’t just flat. They’re falling.
The average hourly wage paid to a key group of American workers has fallen from last year when accounting for inflation, as an economy that appears strong by several measures continues to fail to create bigger paychecks, the federal government said Tuesday. For workers in “production and nonsupervisory” positions, the value of the average paycheck has declined in […]

President Trump speaks to reporters on the North Lawn of the White House on June 15, shortly after he announced new tariffs on China. (Evan Vucci/AP)

President Trump's decision Friday to put hefty tariffs on $50 billion worth of Chinese products means costs are going up for a lot of goods. A tariff is another word for a tax, and Trump just announced significant new taxes on 1,102 items.

This is no longer a war of words between Trump and China. There are actual economic consequences now. The result is that Americans will almost certainly face higher costs as companies pay more for parts they need to build cars, dishwashers and tractors, and then firms turn around and pass those higher prices onto consumers.

All of Trumps tariffs so far — on China, on steel and aluminum, on washing machines and on solar panels — will end up costing the average U.S. family $80 a year, Moody's Analytics estimates in a report to be released next week. If Trump continues to pile tariffs on China (he has threatened to do another $100 billion) and China retaliates, then the cost to the average family would rise to $210, according to Mark Zandi, chief economist at Moody's Analytics. Wall Street bank Goldman Sachs has also forecast rising prices from the tariffs.

The Tax Foundation, a think tank that supported Trump's tax law, predicts that more than 45,000 jobs will be lost because of the tariffs Trump has issued so far. They also forecast a small hit to the economy and wages. Analysts Kyle Pomerleau and Erica York argue that the tariffs will hurt the economy because prices will rise, reducing profits for companies and costing consumers more. Alternatively, tariffs could cause the U.S. dollar to rise, which usually makes it more difficult for American companies to sell their products abroad, another potential hit to jobs and the economy.

The effects of a trade war are difficult to fully predict, in part because how much pain they'll cause the United States depends on how other countries respond. And, of course, the worst case may not come to pass if Trump and China's President Xi Jinping strike a deal soon. But the bottom line is that a lot of different organizations, including ones that typically lean to the right, are all saying costs are probably going up from these tariffs.

Even Trump agrees with that.

In a rally in late April in Michigan, he told supporters to be prepared for “a little pain” in this fight with China and the European Union. He actually issued the warning twice.

First he said: “There may be a little pain for a little while, but ultimately for my farmers, I love my farmers. They are great patriots. … You're going to do much better.”

Then Trump said: “When we lose $500 billion a year … in a trade deficit. When we lose hundreds of billions of dollars in intellectual property theft, not only China but others, we have to stop it. We can’t allow this to happen. So in a certain way, I call people patriots because … short-term you may have to take some problems. Long-term, you’re going to be so happy. You’re going to be so happy.”

Trump is calling on Americans to pay higher prices for a while because he thinks it will be worth it if he gets concessions from China and the E.U. It's what economists and business leaders call a cost-benefit analysis, and Trump is arguing it will be worth it in the end.

But plenty of people are running that cost-benefit calculation in their head and saying it is not worth it. A slew of businesses and Republicans in Congress are urging Trump to stop. They say these tariffs are harming too many U.S. companies and families. That's because higher costs don't hit everyone equally.

The reality is every family isn't going to pay $80. Some families are likely to pay hundreds or thousands or be the ones losing jobs and livelihoods, while most others probably won't notice the price increases.

For example, “laundry equipment” prices have shot up 17 percent since Trump put tariffs on washing machines in January. Families that are buying a new washing machine now probably aren't happy, but the majority of Americans aren't shopping for a new washing machine and may not care much.

Trump's latest round of tariffs is hitting a lot of farm equipment, such as combines used in harvesting and parts for milking machines. For America's 2.1 million farms, that could hurt a lot, especially since China is retaliating by putting tariffs on a lot of U.S. agricultural products. But the rest of the United States might not notice.

China, Canada and the E.U. have targeted politically vulnerable parts of America with their retaliatory tariffs. It's another reason many Republicans are urging Trump to back down. They also say that growth, which is picking up after the Republican tax cut and extra government spending, is now in doubt because of the tariffs.

Gary Cohn, Trump's former top economic adviser, went as far as to say Trump's tariffs could wipe out the entire economic gains of the tax cuts at a Washington Post Live event this week.

But Trump and (most of) his top advisers say this is about winning the big economic war of the 21st century. China and the United States are fighting for dominance in technology and biotechnology. Trump and his team say the United States won't win if China keeps stealing American intellectual property and technology secrets. Years of talks have only made it worse, they say, and it's time for action.

That’s why Trump told farmers and blue-collar supporters in Michigan to buckle up for a bumpy ride for a while. But he also told them it will be worth it in the end.

Trump's top trade negotiator, U.S. Trade Representative Robert E. Lighthizer, told Fox Business a similar story Friday morning, calling the new tariffs “very moderate.”

“We hope that this leads to further negotiations. We hope it leads to China changing its policies,” Lighthizer said.

But Trump is making a gamble. If he does end up getting China to concede on big issues, such as IP theft, many will probably say it was worth it. But for the farmer or the small auto parts manufacturer that may have a terrible year or go out of business during the tariff battle, it probably won't feel worth it. And if China doesn't give in some, Trump will have upset many nations around the world with tariffs and have little to show for it but upset consumers — and potentially upset voters.

Related:

U.S. and China announce new tariffs in escalation of trade war

This was not the dream for U.S.-China trade

Trade war could wipe out gains of GOP tax law, Gary Cohn says



Trump is betting American families are willing to pay for his trade war
President Trump's decision Friday to put hefty tariffs on $50 billion worth of Chinese products means costs are going up for a lot of goods. A tariff is another word for a tax, and Trump just announced significant new taxes on 1,102 items. This is no longer a war of words between Trump and China. There are actual […]
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