Dean Baker's Blog, page 104

In Defense of Larry Kudlow (Sort of)

A lot of folks are running around making a big point of the fact that Larry Kudlow, Trump's new head of the National Economic Council, has gotten a lot of things about the economy wrong, and in particular missed the coming of the Great Recession. For example, here's Dana Milbank's column in the Washington Post this morning.

While Kudlow has gotten a lot of things wrong and completely missed the housing bubble and the implications its collapse would have for the economy, he was hardly alone in...

Thomas Friedman Pitches Protectionism to Help His Friends

Thomas Friedman used his column today to trash Trump for protecting old-line industries like steel and aluminum and argued instead that US trade policy should be, "[...]focused on protecting what we do best — high-value-added manufacturing and intellectual property." In this vein, he argued for rejoining the Trans-Pacific Partnership and very high tariffs on China unless it respects our protectionist policies in these areas. Oh yeah, Friedman also wants to toss a few bones to the less-educate...

NYT News Story Tells Us That Giving Workers More Power Will Derail Germany's Economy

Many economists, including those at the I.M.F., have concluded that the austerity policies imposed on the euro zone by Germany cost millions of jobs and trillions of dollars of output over the last decade. But the NYT dismisses this assessment and tells readers that policies moving away from austerity, "could undo economic boom."

The piece tells readers that reducing restrictions on firing across the eurozone was a major factor in lowering unemployment:

"He also pushed those countries to emu...

The Washington Post Refuses to Let Facts or Logic Get in the Way of Its Agenda on Trade

The Washington Post has long used both its opinion pages and news section to advance its agenda on trade. It is famous for inventing a GDP boom in Mexico to push the case for NAFTA. More  than a decade ago it ran an editorial claiming that Mexico's GDP quadrupled between 1987 and 2007, which it attributed to NAFTA.

The actual number was 84.2 percent, according to the I.M.F. In spite of this gross error, the paper has never run a correction.

Given the Post's history on trade, it was not s...

Ronald Brownstein Says the Democrats Have Become the Party of Fake Free Traders

Okay, Brownstein didn't use the word "fake," but that is the position he described in his CNN column. Brownstein argues that the Democrats  predominately live in tech centers like Seattle and the Bay area which export large amounts of high tech products and services. He argues these tech areas won't be helped by Trump's steel tariffs and could be hurt by retaliation from foreign countries.

While it is true that these areas will not be helped by steel tariffs it is dishonest to say that t...

Small Businesses Still Aren't Impressed by the Republican Tax Cut

Apparently, America's small business owners are too dumb to realize how great the tax cuts were. The Trump administration told us that the corporate tax cuts would lead to a massive boom in investment which would increase the capital stock by one third above the baseline projection. But for some reason, the nation's businesses haven't gotten the message.

The National Federation of Independent Businesses released its February survey of its members this morning. The survey showed (page 29) that...

Reuters Says German Employers Don't Understand Labor Markets, Don't Raise Wages In Spite of Labor Shortage

It seems Germany is suffering from a skills gap also, at least according to Reuters. It told readers:

"Labour shortages in Germany are threatening the whole economy as companies struggle to fill around 1.6 million job vacancies, the DIHK Chambers of Industry and Commerce said on Tuesday."

According to the OECD, labor compensation rose by just 2.6 percent last year, down from a 2.9 percent rate in 2016. When an item is in short supply, we expect the price to rise. If there is a housing short...

ADP Gives More Evidence of a Pickup in Wage Growth at the Bottom

Most data indicate relatively little acceleration in wage growth overall, but as I have noted the Current Population Survey shows more rapid wage growth at middle and especially the bottom end of the wage distribution over the last three years. The "Workforce Vitality Index" produced by ADP, shows a similar picture.

It's most recent survey shows hourly wage growth of more than 6.0 percent for workers earning less than $20,000 a year and 5.6 percent for workers earning $20,000 to $50,000 a yea...

Explaining Pessimism to Robert Samuelson

As Robert Samuelson tells us in his weekly column in the Washington Post, there is a big market for people saying that things are great. Samuelson cites a number of authors and statistics telling readers that things are getting better.

He then speculates about why we have so much pessimism. He suggests that the media is at fault for using the word "crisis" too frequently and tells us:

"But some of today’s pessimism is simply a political fad. It 'became fashionable, starting in academia and e...

Neither Christopher Liddell or Microsoft Support Unbridled Free Markets

The NYT had an article profiling Christopher Liddell, who is currently the Trump administration's director of strategic initiatives and is apparently a top candidate to replace Gary Cohn as head of the National Economic Council. In recounting his career, the piece notes that Liddell had been the chief financial officer at Microsoft.

The piece later presents a comment on trade from Liddell:

“I think the days of unbridled free trade and unbridled free markets are over.”

“I worked in the priv...