Dean Baker's Blog, page 103

Washington Post Warns China May End Currency Manipulation in Retaliation Against Trump's Tariffs

Yes, things could really nasty. In discussing the ways in which China might retaliate against tariffs, the Post told readers:

"China is also the largest foreign holder of U.S. government debt. It holds $1.17 trillion of U.S. Treasury securities, down about $33.5 billion since last August. The U.S. government faces huge borrowing needs, not only to finance new deficits but also to refinance past securities now coming due, so a drop in China’s appetite for that debt could nudge interest r...

China as Number One: The Relative Size of the U.S. and Chinese Economies

Eswar Prasad makes the case in a NYT column that we should be paying attention to selection of Yi Gang to head China's central bank as a result of China's status as the world's second largest economy. Prasad is right about the importance of China's central bank in the world economy, but it is worth noting that by purchasing power parity (PPP) measures China is already by far the world's largest economy.

Purchasing power parity calculations of GDP attempt to measure all the goods and services...

The Washington Post Wants to Cut Social Security and Medicare but Doesn't Have the Courage to Say It

It's hard not to have a certain attachment to the Post's longstanding crusade against Social Security and Medicare. After all, it has been pushing for cuts to these programs at least since I came to town in 1992. They did in the high deficit years of the early 1990s, the boom times of the late 1990s, the housing bubble years of the 2000s, and through the Great Recession. So the Post calling for cuts to these programs is pretty much as predictable as the sun coming up. So this morning's call f...

Robert Samuelson Gives Still More Evidence of the Skills Shortage

We all know about the skills shortage. Employers just can't find workers with the skills necessary for the jobs that are available. As a result, jobs go wanting and many workers remain unemployed.

Samuelson gives us yet another example of the skills shortage in his column titled, "Don't deny the link between poverty and single parenthood." Apparently, Samuelson was irked by a column in the NYT last month that told readers "Single mothers are not the problem."

The piece argues that there are n...

Adjusting Fines for Income: NYT Goes 100 Percent Loon Tune

It is amazing how otherworldly seemingly intelligent people can sometimes be. The NYT ran a column by Alec Schierenbeck arguing that fines for things like parking and traffic violations should be progressive.

The point is that a $150 speeding ticket is no big deal to a high-priced doctor or lawyer, whereas it is a huge deal to a mother working at near minimum wage job. This fine may be an impossible for burden for the latter, possibly leading to eviction or even imprisonment in some cases for...

More on Those Big Tax Cut Bonuses for Workers (see addendum)

Many large companies managed to get some good publicity by announcing bonuses for their workers which they said were the fruits of the tax cuts. We, of course, have no way of knowing the extent to which these bonuses were due to the tax cut or were simply a story of companies trying to retain workers in a tighter labor market. 

In that context, it would have been better to see pay increases, which presumably will be in place in subsequent years and provide a higher basis for future pay r...

More on Those Big Tax Cut Bonuses for Workers

Many large companies managed to get some good publicity by announcing bonuses for their workers which they said were the fruits of the tax cuts. We of course have no way of knowing the extent to which these bonuses were due to the tax cut or were simply a story of companies trying to retain workers in a tighter labor market. 

In that context, it would have been better to see pay increases, which presumably will be in place in subsequent years and provide a higher basis for future pay rai...

Private Equity and Toys 'R' Us: Lessons of Bankruptcy

As someone whose mother took him to Bargain Town (the original name for Toys 'R' Us) when I was a little kid, it's hard not to feel sad to see Toys 'R' Us being liquidated. There were obviously many factors involved the company's collapse. It faced serious competition from first Walmart and then Amazon and other internet retailers in a rapidly changing environment.

This situation would have made prospering difficult for Toys 'R' Us in any case, but its takeover by private equity was what rea...

The New York Times Has Determined that China is Violating International Rules on Patents and Copyrights

It would be interesting to know how the paper made that determination, but it referred to "China’s theft of American intellectual property" as a matter of fact. China is bound by the TRIPs provisions in the WTO, but there are many different interpretations of these rules.

Perhaps the NYT has analyzed China's practices and determined they violate TRIPs. If so, they should share this analysis with its readers.

It is also worth noting that the enforcement of intellectual property rules in China...

Trump Was Right About the Trade Deficit with Canada

It was widely reported that Donald Trump confronted Canada's prime minister Justin Trudeau over his country's trade surplus with the United States. Trump was mocked in these stories since they claimed that Canada actually has a trade deficit with the United States. When confronted with this alleged fact, Trump boasted about just making up numbers in his exchange with Canada's prime minister.

It turns out that Trump is actually correct about Canada's trade surplus with the United States. The C...