Dean Baker's Blog, page 102

Trump Administration Takes Anti-trust Action to Protect Uber

That was not a typo. The Justice Department and Federal Trade Commission intervened on Uber's side in a case involving a regulation passed by Seattle's city council which would allow Uber drivers to negotiate collectively. The issue is that Uber insists its drivers are independent contractors, not employees. This means that they don't have the rights guaranteed by employees under the National Labor Relations Act to bargain collectively with their employer.

Seattle's city council sought to wor...

Migrant Labor Is Not What Distinguishes China from Other Developing Countries

The NYT had a strange column today carrying the headline, "The orphans of China's economic miracle." The piece talks about the tens of millions of children who were left behind in the countryside when their parents left to find better paying jobs elsewhere in the country.

The reason why the column is strange is that it might leave readers with the impression that China is an exception among developing countries in having large numbers of migrant workers who leave their children behind in the...

Does the Government Have to Step in to Keep Uber from Losing Money?

That is in effect what Steven Hill argues in his NYT column today. While the column makes many useful points about Uber's impact on the environment and its treatment of its drivers, the underlying issue is that Uber is hugely subsidizing its rides, causing it to lose $4.5 billion in 2017. Hill proposes that the government either require Uber to raise its fees or that it impose a tax to offset the loss.

While the idea of leveling the playing field is appealing, it is worth asking why a company...

John Williams as President of New York Federal Reserve Bank?

Several press accounts have fingered John Williams, currently president of the San Francisco Federal Reserve Bank, to be the next president of the New York Fed. There are several reasons why this should be upsetting.

First, while the NY Fed had committed itself to an open process in selecting its new president, the turn to Williams seems to have taken place in the dark of night. He had not been mentioned as being one of the people in contention until just the last week.

It is also upsetting t...

More Thoughts on Trade

Neil Irwin had an interesting piece arguing that Trump is fighting the last battle on trade in worrying about imports of steel and aluminum. His main point, that the millions of jobs we lost in manufacturing to trade in the last decade are not coming back, is largely correct. But there are a few points worth adding.

First, it would be worth having a little honesty about the impact of trade on the country’s workers. It is standard wisdom in political circles to say that trade really wasn’t cau...

Actually, Businesses Formed S Corporations to Avoid the Corporate Income Tax

The Washington Post might have confused some readers in a piece on how many highly paid professionals are looking to form new S corporations to game the new tax law. Most people who own S corporations will get a 20 percent tax savings on the income they get from these corporations.

At one point the piece told readers:

"Millions of American businesses pay taxes through the individual tax code, known in tax parlance as 'pass-through' businesses. [These are S corporations.] They’ve historically...

The Washington Post Wants You to Believe that Republicans Had Been Committed to Free Trade and Fiscal Austerity

It said this clearly in a front page article. The piece tells readers how Republicans are falling in line behind Trump's agenda. After noting that the new budget passed by Congress will lead to a deficit of more than $1 trillion in 2019, the article comments:

"It was another example of how Trump seems to have overtaken his party’s previously understood values, from a willingness to flout free-trade principles and fiscal austerity to a seeming abdication of America’s role as a global voice fo...

Are the Tax Cuts Working?

If anyone took the rationale for the Republican tax cuts seriously, the key measure is investment. The promise was that lower corporate tax rates would provide a huge incentive for investment, causing the capital stock to increase by roughly one-third over its baseline growth path within a decade.

As I have pointed out, the early numbers were not good. Capital goods orders fell in both December and January. The National Federation of Independent Businesses reports no notable uptick in the inv...

Trump vs. Krugman on Trade Wars

Paul Krugman used his column this morning to go after Donald Trump for rushing blindly into a trade war. While I agree with Krugman's basic points, Trump does not seem to know what he is doing and therefore this is not likely to end well, I would disagree with Paul on a few points.

First, Krugman makes the point that the Commerce Department's measure of our trade deficit with China is overstated because it counts the full value of exports from China as coming from China, even though most of t...

The United States Has Not Been Pushing for Open Markets

It is striking how the media universally accept the idea that patent and copyright monopolies are somehow free trade. We get that the people who own and control major news outlets like these forms of protection, but it is incredibly dishonest to claim that they are somehow free trade.

We get this story yet again in an NYT piece complaining about China's "theft" of intellectual property while telling readers about how Trump's proposed tariffs show his:

"[...]resolve to turn away from a decade...