Economics: What's up with the NW Oregon Gross Domestic Product - St. Helens Chronicle

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Economics: What's up with the NW Oregon Gross Domestic Product  St. Helens Chronicle
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Trickle-down economics at heart of baseball labor dispute - Westport News

NEW YORK (AP) — Francisco Lindor’s $341 million contract with the New York Mets was supposed to be a boon for other shortstops. Same for pitchers when aces Gerrit Cole and Max Scherzer signed megadeals.

Baseball players have long benefited from trickle-down economics, where stars set a market that leads to bigger paydays for those down below. While a bevy of record-setting deals in recent seasons have boosted the top of the salary scale, they haven’t done much for players at the lower end and may have contributed to a thinning of the middle class.

Players’ belief in a top-down market and their desire to increase team payrolls are at the heart of the financial differences leading to Major League Baseball’s first work stoppage in 26 years.

Lindor, Cole and Scherzer are on the union’s eight-man executive subcommittee. The group also includes infielder Marcus Semien, catcher Jason Castro and pitchers Zack Britton, Andrew Miller and James Paxton. Of those, only Castro — at $3.5 million — earned less than $12 million last season.

Of the 1,670 players who appeared on a major league roster this year, 1,145 earned under $1 million, including 771 below $500,000 and 241 under $100,000.

“Ultimately we are fighting to improve things in a lot of places for the next CBA,” Miller wrote in an email to The Associated Press. “We want every player to be treated and compensated fairly, every team to attempt to win and ultimately every fan of our game to see the best version of baseball possible.”

Concerned salaries have been depressed by the luxury tax and a decline in major league payrolls since 2017, the union proposed lifting the tax threshold from $210 million to $245 million. Players would lower free-agent eligibility from six seasons of big league service to five for players 29.5 and younger by 2025-26 and drop salary arbitration eligibility to two years. The overwhelming percentage of gains would go to the highest earners.

MLB asserts union proposals would cause more stars to leave smaller markets, a stance players say is a ruse designed to hide an aversion to a spending surge.

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“The closer you get to a free market, the closer you get to accurate valuation to the players, and the more restrictions in place, the more artificial the salaries are,” said Gabe Feldman, director of Tulane’s sports law program. “But then there’s also the concern that all leagues have, that if there is a free market, then the big-market teams will attract all the best players because they’ll be willing to pay more.”

Negotiations broke off Dec. 1, hours ahead of the collective bargaining agreement’s expiration, and MLB launched a lockout the following day. The sides have remained publicly quiet since, and talks on the key economics are not expected to resume until next month as the scheduled start of spring training on Feb. 16 nears.

MLB’s 100 highest-paid players accounted for 50.6% of 2021 earnings on opening-day rosters.

As many teams committed a higher percentage of payroll to stars, some jettisoned journeymen with seven-figure salaries in favor of younger players with split contracts: far lower pay in the minor leagues than in the majors. Because of that and the increased role of relievers, the bottom of rosters has become a constant churn between the majors and minors.

“We’ve been broadly at war with our mid-tier players over the last two decades, in the salary-cap sports and in baseball with the luxury tax and with free agency,” said Bob Boland, a former agent who teaches at Penn State’s School of Labor and Employment Relations. “If you’re a players’ union, you know the top end of free agency will always have some value. What you’re concerned about is, is there a vibrant bit of the next tier, and baseball’s already cut that down strenuously.”

MLB has proposed raising the major league minimum salary from $570,500 to a series of tiers: $600,000 for players with less than a year of big league service, $650,000 for at least one but less than two and $700,000 for at least two. Each would rise $10,000 annually, to $640,000, $690,000 and $740,000 in 2026.

Players have asked for the highest percentage minimum increase in decades: $775,000, rising to $875,000 by the final season. Both sides would raise minimums while on assignment to the minors.

Players also have proposed that those not yet eligible for arbitration split a $105 million bonus pool from central revenue, based on WAR, appearances on an all-MLB team and recognition such as best position player, best pitcher and best rookie.

Expanding the designated hitter to the National League likely would create several higher-paying jobs for veteran hitters.

Baseball’s luxury tax threshold began at $117 million in 2003, increased to $148 million by 2007 and reached $206 million in 2019, the last season before the pandemic. The threshold rose 18% from 2013-19, a period in which MLB has announced revenue figures with a 49% increase.

Commissioner Rob Manfred put MLB’s operating losses at $3 billion in 2020 because of the pandemic and said it was too soon to announce a 2021 figure.

At most, six teams have paid luxury tax in any season and the norm has been closer to three. Many clubs have treated the threshold as a cap, making the tax the most significant factor in limiting club spending. If tax level was the only factor, the proposed free agency and arbitration changes likely would shift an additional percentage of money to stars, but the union insists the economic system is not zero sum and there are compounding benefits to many players from its proposals.

Teams have offered a tax threshold of $214 million in each of the next three seasons, rising to $216 million in 2025 and $220 million in 2026.

And while teams have proposed a $100 million payroll minimum, it would be funded by a 25% tax on payrolls above $180 million. The union says the penalty at the top would more than offsets any gain at the bottom.

In addition, players want to stop what they term tanking and what the clubs call prudent decisions to tear down big league rosters in the short-term aimed at rebuilding for longer-term success.

Both sides have proposed expanding the playoffs, owners from 10 teams to 14 and players to 12, which would incentivize more competition. Players also want safeguards against service time manipulation, such as proposing the ability to accrue service time based on achievements.

Negotiators also have discussed an NBA-style draft lottery, but owners would limit it to the top three teams and players would expand it to the top eight. The union would reward small-market teams with additional draft picks for success, such as making the playoffs or finishing with a winning record.

For now, possible changes to speed the pace of play have been set aside.

___

More AP MLB: https://apnews.com/hub/MLB and https://twitter.com/AP_Sports

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Trickle-down economics at heart of baseball labor dispute - Towanda Daily Review

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Trickle-down economics at heart of baseball labor dispute - The Edwardsville Intelligencer

NEW YORK (AP) — Francisco Lindor’s $341 million contract with the New York Mets was supposed to be a boon for other shortstops. Same for pitchers when aces Gerrit Cole and Max Scherzer signed megadeals.

Baseball players have long benefited from trickle-down economics, where stars set a market that leads to bigger paydays for those down below. While a bevy of record-setting deals in recent seasons have boosted the top of the salary scale, they haven’t done much for players at the lower end and may have contributed to a thinning of the middle class.

Players’ belief in a top-down market and their desire to increase team payrolls are at the heart of the financial differences leading to Major League Baseball’s first work stoppage in 26 years.

Lindor, Cole and Scherzer are on the union’s eight-man executive subcommittee. The group also includes infielder Marcus Semien, catcher Jason Castro and pitchers Zack Britton, Andrew Miller and James Paxton. Of those, only Castro — at $3.5 million — earned less than $12 million last season.

Of the 1,670 players who appeared on a major league roster this year, 1,145 earned under $1 million, including 771 below $500,000 and 241 under $100,000.

“Ultimately we are fighting to improve things in a lot of places for the next CBA,” Miller wrote in an email to The Associated Press. “We want every player to be treated and compensated fairly, every team to attempt to win and ultimately every fan of our game to see the best version of baseball possible.”

Concerned salaries have been depressed by the luxury tax and a decline in major league payrolls since 2017, the union proposed lifting the tax threshold from $210 million to $245 million. Players would lower free-agent eligibility from six seasons of big league service to five for players 29.5 and younger by 2025-26 and drop salary arbitration eligibility to two years. The overwhelming percentage of gains would go to the highest earners.

MLB asserts union proposals would cause more stars to leave smaller markets, a stance players say is a ruse designed to hide an aversion to a spending surge.

“The closer you get to a free market, the closer you get to accurate valuation to the players, and the more restrictions in place, the more artificial the salaries are,” said Gabe Feldman, director of Tulane’s sports law program. “But then there’s also the concern that all leagues have, that if there is a free market, then the big-market teams will attract all the best players because they’ll be willing to pay more.”

Negotiations broke off Dec. 1, hours ahead of the collective bargaining agreement’s expiration, and MLB launched a lockout the following day. The sides have remained publicly quiet since, and talks on the key economics are not expected to resume until next month as the scheduled start of spring training on Feb. 16 nears.

MLB’s 100 highest-paid players accounted for 50.6% of 2021 earnings on opening-day rosters.

As many teams committed a higher percentage of payroll to stars, some jettisoned journeymen with seven-figure salaries in favor of younger players with split contracts: far lower pay in the minor leagues than in the majors. Because of that and the increased role of relievers, the bottom of rosters has become a constant churn between the majors and minors.

“We’ve been broadly at war with our mid-tier players over the last two decades, in the salary-cap sports and in baseball with the luxury tax and with free agency,” said Bob Boland, a former agent who teaches at Penn State’s School of Labor and Employment Relations. “If you’re a players’ union, you know the top end of free agency will always have some value. What you’re concerned about is, is there a vibrant bit of the next tier, and baseball’s already cut that down strenuously.”

MLB has proposed raising the major league minimum salary from $570,500 to a series of tiers: $600,000 for players with less than a year of big league service, $650,000 for at least one but less than two and $700,000 for at least two. Each would rise $10,000 annually, to $640,000, $690,000 and $740,000 in 2026.

Players have asked for the highest percentage minimum increase in decades: $775,000, rising to $875,000 by the final season. Both sides would raise minimums while on assignment to the minors.

Players also have proposed that those not yet eligible for arbitration split a $105 million bonus pool from central revenue, based on WAR, appearances on an all-MLB team and recognition such as best position player, best pitcher and best rookie.

Expanding the designated hitter to the National League likely would create several higher-paying jobs for veteran hitters.

Baseball’s luxury tax threshold began at $117 million in 2003, increased to $148 million by 2007 and reached $206 million in 2019, the last season before the pandemic. The threshold rose 18% from 2013-19, a period in which MLB has announced revenue figures with a 49% increase.

Commissioner Rob Manfred put MLB’s operating losses at $3 billion in 2020 because of the pandemic and said it was too soon to announce a 2021 figure.

At most, six teams have paid luxury tax in any season and the norm has been closer to three. Many clubs have treated the threshold as a cap, making the tax the most significant factor in limiting club spending. If tax level was the only factor, the proposed free agency and arbitration changes likely would shift an additional percentage of money to stars, but the union insists the economic system is not zero sum and there are compounding benefits to many players from its proposals.

Teams have offered a tax threshold of $214 million in each of the next three seasons, rising to $216 million in 2025 and $220 million in 2026.

And while teams have proposed a $100 million payroll minimum, it would be funded by a 25% tax on payrolls above $180 million. The union says the penalty at the top would more than offsets any gain at the bottom.

In addition, players want to stop what they term tanking and what the clubs call prudent decisions to tear down big league rosters in the short-term aimed at rebuilding for longer-term success.

Both sides have proposed expanding the playoffs, owners from 10 teams to 14 and players to 12, which would incentivize more competition. Players also want safeguards against service time manipulation, such as proposing the ability to accrue service time based on achievements.

Negotiators also have discussed an NBA-style draft lottery, but owners would limit it to the top three teams and players would expand it to the top eight. The union would reward small-market teams with additional draft picks for success, such as making the playoffs or finishing with a winning record.

For now, possible changes to speed the pace of play have been set aside.

___

More AP MLB: https://apnews.com/hub/MLB and https://twitter.com/AP_Sports

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The power of economics to explain and shape the world - MIT News

Nobel Prize-winning economist Esther Duflo sympathizes with students who have no interest in her field. She was such a student herself — until an undergraduate research post gave her the chance to learn first-hand that economists address many of the major issues facing human and planetary well-being.

“Most people have a wrong view of what economics is. They just see economists on television discussing what’s going to happen to the stock market,” says Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. “But what people do in the field is very broad. Economists grapple with the real world and with the complexity that goes with it.”

That’s why this year Duflo has teamed up with Professor Abhijit Banerjee to offer 14.009 (Economics and Society’s Greatest Problems), a first-year discovery subject — a class type designed to give undergraduates a low-pressure, high-impact way to explore a field. In this case, they are exploring the range of issues that economists engage with every day: the economic dimensions of climate change, international trade, racism, justice, education, poverty, health care, social preferences, and economic growth are just a few of the topics the class covers.

“We think it’s pretty important that the first exposure to economics is via issues,” Duflo says. “If you first get exposed to economics via models, these models necessarily have to be very simplified, and then students get the idea that economics is a simplistic view of the world that can’t explain much.”

Arguably, Duflo and Banerjee have been disproving that view throughout their careers. In 2003, the pair founded MIT’s Abdul Latif Jameel Poverty Action Lab, a leading antipoverty research network that provides scientific evidence on what methods actually work to alleviate poverty — which enables governments and nongovernmental organizations to implement truly effective programs and social policies. And, in 2019 they won the Nobel Prize in economics (together with Michael Kremer of the University of Chicago) for their innovative work applying laboratory-style randomized, controlled trials to research a wide range of topics implicated in global poverty.

“Super cool”

First-year Jean Billa, one of the students in 14.009, says, “Economics isn’t just about how money flows, but about how people react to certain events. That was an interesting discovery for me.”

It’s also precisely the lesson Banerjee and Duflo hoped students would take away from 14.009, a class that centers on weekly in-person discussions of the professors’ recorded lectures — many of which align with chapters in Banerjee and Duflo’s book “Good Economics for Hard Times” (Public Affairs, 2019).

Classes typically start with a poll in which the roughly 100 enrolled students can register their views on that week’s topic. Then, students get to discuss the issue, says senior Dina Atia, teaching assistant for the class. Noting that she finds it “super cool” that Nobelists are teaching MIT’s first-year students, Atia points out that both Duflo and Banerjee have also made themselves available to chat with students after class. “They’re definitely extending themselves,” she says.

“We want the students to get excited about economics so they want to know more,” says Banerjee, the Ford Foundation International Professor of Economics, “because this is a field that can help us address some of the biggest problems society faces.”
 
Using natural experiments to test theories

Early in the term, for example, the topic was migration. In the lecture, Duflo points out that migration policies are often impacted by the fear that unskilled migrants will overwhelm a region, taking jobs from residents and demanding social services. Yet, migrant flows in normal years represent just 3 percent of the world population. “There is no flood. There is no vast movement of migrants,” she says.

Duflo then explains that economists were able to learn a lot about migration thanks to a “natural experiment,” the Mariel boat lift. This 1980 event brought roughly 125,000 unskilled Cubans to Florida over a matter a months, enabling economists to study the impacts of a sudden wave of migration. Duflo says a look at real wages before and after the migration showed no significant impacts.

“It was interesting to see that most theories about immigrants were not justified,” Billa says. “That was a real-life situation, and the results showed that even a massive wave of immigration didn’t change work in the city [Miami].”

Question assumptions, find the facts in data

Since this is a broad survey course, there is always more to unpack. The goal, faculty say, is simply to help students understand the power of economics to explain and shape the world. “We are going so fast from topic to topic, I don’t expect them to retain all the information,” Duflo says. Instead, students are expected to gain an appreciation for a way of thinking. “Economics is about questioning everything — questioning assumptions you don’t even know are assumptions and being sophisticated about looking at data to uncover the facts.”

To add impact, Duflo says she and Banerjee tie lessons to current events and dive more deeply into a few economic studies. One class, for example, focused on the unequal burden the Covid-19 pandemic has placed on different demographic groups and referenced research by Harvard University professor Marcella Alsan, who won a MacArthur Fellowship this fall for her work studying the impact of racism on health disparities.

Duflo also revealed that at the beginning of the pandemic, she suspected that mistrust of the health-care system could prevent Black Americans from taking certain measures to protect themselves from the virus. What she discovered when she researched the topic, however, was that political considerations outweighed racial influences as a predictor of behavior. “The lesson for you is, it’s good to question your assumptions,” she told the class.

“Students should ideally understand, by the end of class, why it’s important to ask questions and what they can teach us about the effectiveness of policy and economic theory,” Banerjee says. “We want people to discover the range of economics and to understand how economists look at problems.”

Story by MIT SHASS Communications
Editorial and design director: Emily Hiestand
Senior writer: Kathryn O'Neill

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Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say - The New York Times

Within 24 hours, the Federal Reserve, Bank of England and European Central Bank all stepped forward to deal with price increases.

There is still a lot scientists do not know about Omicron. There is cautious optimism — but no certainty — about the effectiveness of vaccines against this fast-spreading variant of the coronavirus, and experts do not fully understand what it means for public health or the economy.

But central banks have concluded they don’t have the luxury of waiting to find out.

Facing surging inflation, three of the world’s most influential central banks — the Federal Reserve, Bank of England and European Central Bank — took decisive steps within 24 hours of each other to look past Omicron’s economic uncertainty.

On Thursday, Britain’s central bank unexpectedly raised interest rates for the first time in more than three years as a way to curb inflation that has reached a 10-year high. The eurozone’s central bank confirmed it would stop purchases under a bond-buying program in March. The day before, the Fed projected three interest rate increases next year and said it would accelerate the wind down its own bond-buying program.

The perception that the Bank of England would “view the outbreak of the Omicron variant with greater concern than it actually did” caused the surprise in financial markets, ” Philip Shaw, an economist at Investec in London, wrote in a note to clients. The Fed also “carried on regardless” with its tightening plans, he added.

Aside from Omicron, the central banks were running out of reasons to continue emergency levels of monetary stimulus designed to keep money flowing through financial markets and to keep lending to businesses and households robust throughout the pandemic. The drastic measures of the past two years had done the job — and then some: Inflation is at a nearly 40-year high in the United States; in the eurozone it is the highest since records began in 1997; and price rises in Britain have consistently exceeded expectations.

It is still unknown how Omicron will affect the economic recovery. Vaccine makers are still testing their shots against the variant.Alessandro Grassani for The New York Times

The heads of all three central banks have separately decided that the price gains won’t be as temporary as they once thought, as supply chains take a while to untangle and energy prices pick up again.

Andrew Bailey, the governor of the Bank of England, said that policymakers in Britain were seeing things that could threaten inflation in the medium-term. “So that’s why we have to act,” he said on Thursday.

“We don’t know, of course, a lot about Omicron at the moment,” he added. It could slow the economy, and already there are canceled holiday parties, fewer restaurant bookings, less retail foot traffic and signs that more people are staying home. But Omicron could also worsen inflationary pressures, he said. “And that’s, I’m afraid, a very important factor for us.”

Already, price gains have popped higher this year as snarled supply chains and goods shortages have raised shipping and manufacturing costs. Depending on the severity of Omicron and how governments react, the variant could cause factories to shut down and could keep supply chains in disarray and workers at home, prolonging goods and labor shortages and pushing inflation higher.

At the same time, policymakers are assuming the impact on the economy will be milder than previous waves of the virus. With each surge in cases and reintroduction of restrictions, the dent to the economy has gotten smaller and smaller. This would lessen the risk that the central banks end up tightening monetary policy into a downturn.

Still, it is an awkward balancing act. On the same day the Bank of England raised rates, its staff cut half a percentage point from their growth forecasts for the final three months of the year. By the end of 2021, the British economy will still be 1.5 percent smaller than its prepandemic size, the bank estimated.

Christine Lagarde, the president of the European Central Bank, said Omicron had created uncertainty in the face of a strong recovery.Pool photo by Ronald Wittek

“From a macroeconomic perspective, it’s unlikely that the fourth wave is going to have as meaningful an impact as we’ve seen even during last winter,” said Dean Turner, an economist at UBS Global Wealth Management.

The economic recoveries from the pandemic, though bumpy, haven’t been derailed yet. Unemployment rates are falling in Europe and the United States, and businesses are complaining that is difficult to hire staff. That, combined with the burst of inflation, was enough to bolster the case for some monetary tightening.

“There’s a lot of uncertainty with the new variant, and it’s not clear how big the effects would be on either inflation or growth or hiring,” Jerome H. Powell, the Fed chair, said on Wednesday. But there is a “real risk” inflation could be more persistent, he also said, which was part of the reason the bank sped up its plans to taper its bond purchases.

Ending the Fed’s bond purchases sooner would give the central bank room to react to a wider range of economic outcomes next year, Mr. Powell said.

“The data is pretty glaring,” Mr. Turner of UBS said of recent statistics on inflation and employment. “There’s only so much caution you can get away with,” before central banks need to take action, he said.

Omicron has created uncertainty in the face of a strong recovery, Christine Lagarde, the president of the European Central Bank said on Thursday after she outlined how the bank would end its largest pandemic-era stimulus measure.

Vaccine-makers are still testing their shots against Omicron and medical officials are encouraging restraint when it comes to socializing rather than implementing new lockdowns, but central bankers are marching ahead because time isn’t on their side. The effect of monetary policy decisions on the wider economy isn’t immediate.

The Bank of England is forecasting that inflation will peak at 6 percent in April, three times the central bank’s target. Within such a short time frame, there is little policymakers can do to stop that from happening, but they can try to signal to businesses and unions setting wages that they will act to stop higher inflation from becoming entrenched, said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. This may prevent higher prices from spilling over into significantly higher wages, which could cause businesses to raise prices even more.

While all three central banks are facing similar problems with high inflation and are keeping watch over wage negotiations, their future challenges are different.

The Federal Reserve and Bank of England are worried about the persistence of high inflation. For the European Central Bank, inflation in the medium term is too low, not too high. It is still forecasting inflation to be below its 2 percent target in 2023 and 2024. To help reach that target in coming years, the central bank will increase the size of an older bond-buying program beginning in April, after purchases end in the larger, pandemic-era program. This is to avoid “a brutal transition,” Ms. Lagarde said.

She warned against drawing strong comparisons between Britain, the United States and the eurozone economies.

“Those three economies are at a completely different states of the cycle,” she said. “We are in a different universe and environment,” even though there might be some spillover effects across countries from the actions each central bank takes.

Melissa Eddy and Jeanna Smialek contributed reporting.

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Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say - The New York Times
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MLB News: “Core economics” negotiations unlikely to resume until January - Beyond the Box Score

Evan Drellich | The Athletic $: MLB and the MLBPA are unlikely to discuss “core economics” until January. The two sides have had some communication since the lockout began, but the more contentious topics haven’t been negotiated since the days leading up to the CBA’s expiration. While the league and the union are incentivized to start the season on time, the longer they wait, the more likely it is that Opening Day will be delayed.

Russell Carleton | Baseball Prospectus $: Economics aren’t the only things that will be negotiated this winter. Labor issues often affect the game itself as is the case with playoff expansion and the universal DH.

Dan Martin | The Crawfish Boxes: Astros bench coach Joe Espada is a candidate for the managerial jobs with the Mets and A’s. Though other teams have considered him before, Espada may be feeling more urgency to leave Houston since Dusty Baker has been extended.

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