Dean Baker's Blog, page 108

Fred Hiatt and His Friends' Push for Austerity Did Far More Damage to the Country than Projected Budget Deficits Ever Could

The Washington Post's editorial page is notorious for refusing to own up to its mistakes. In true Trumpian spirit, the paper still has not corrected an editorial touting the success of NAFTA which absurdly claimed Mexico's GDP had more than quadrupled between 1987 and 2007. The correct number was 84.2 percent.

Anyhow, Fred Hiatt, the editorial page editor, is now complaining again about the horrible harm that will be caused by future deficits. In any plausible scenario, the potential harm fro...

E.J. Dionne Says Life Is Tough on the Moderate Left

I know and respect E.J. Dionne, but I'm afraid I have to get out a heaping dump truck full of ridicule for his whining about the "agony of the moderate left." Yeah, times can be difficult for these politicians. After all, when their half measures fail to produce results for those who they claim to represent, they get voted out of office and then are stuck earning multi-million dollar salaries in the private sector or doing six figure speaking gigs for Wall Street banks.

This compares to life...

NYT Reports on Business Person Running for Democratic Presidential Nomination Who Agrees with Republican Growth Projections

The article discusses the agenda of Andrew Yang, a New York-based businessperson, whose political agenda is centered on dealing with mass job displacement due to robots and artificial intelligence. Such mass displacement implies rapid productivity growth, presumably along the lines of the 3.0 percent growth the country saw in the long Golden Age from 1947 to 1973 and again from 1995 to 2005.

This sort of rapid productivity growth would make it possible to reach the 3.0 percent growth rate tha...

The Simple Way to Lower Drug Prices: Stop Having the Government Make them Expensive with Patent Monopolies

It's always important to remember that the problem of high drug prices is almost entirely a government-created problem in the form of patent monopolies. In the absence of these monopolies, almost all drugs would be cheap. In many cases, the free market price is less than 1.0 percent of the patent monopoly price.

It would have been helpful to note this fact in this NYT piece on a Trump Administration plan to lower drug prices to patients. Several Democratic members of Congress, including Senat...

NYT Misleads Readers: "Ballooning Deficits" Do Not Add Urgency to Republican Efforts to Cut Medicaid and Other Programs

The NYT should have its presses washed out with soap. In an article about plans to impose work requirements for Medicaid it told readers:

"The ballooning deficits created by the budget deal that President Trump signed into law Friday and the recent tax bill are likely to add urgency to the party’s attempts to wring savings from entitlement programs."

This needs a big "what the f**k are you talking about?" The Republicans do everything they can to increase the deficit with tax cuts and additio...

The Peter Peterson Gang and the Shameless Deficit Hawks

It is more than a bit painful to see the media all turn to the Peter Peterson financed Committee for a Responsible Federal Budget (CRFB) as the experts on budget deficits right now. We can argue over whether the Republicans are pushing too far with their deficits when the economy is near full employment, but one thing that is not arguable is that we had needlessly austere federal budgets for the last decade.

While the austerity was largely attributable to the Republicans in Congress, who had...

More on the Budget Deal: Suppose the Washington Post Cared About Informing Readers

Here are a few small changes from the article in today's Post ("Massive infusion of spending ends era of restraint for federal agencies, Pentagon) telling readers how the new budget deal would increase the budget deficit.

"The deal signed into law by President Trump will pump more than $500 billion in additional money (1.2 percent of GDP) into domestic agencies and the Pentagon over two years, the biggest increase in spending in almost a decade. It ends months of budget squabbles and provides...

We're Highjacking Beat the Press

Hi everyone, this is CEPR, taking over Beat the Press for an important announcement. We're planning a party in honor of Dean's 18 years as CEPR's Co-Director and we'd love for you to come. February 26, 2018, Busboys and Poets 5th and K location, in Washington, DC.

Details can be found here.

Hope to see you there! Now, back to your regularly scheduled programming.

Richard Levin, Former Yale President, Agrees With Republican Growth Projections in NYT Piece

In an NYT column advocating that companies spend more money on training their workers, former Yale president Richard Levin implicitly endorsed the Republicans' view that the economy will grow much more rapidly than projected by the Congressional Budget Office and most other forecasters. Levin bases his argument in part on an evaluation by McKinsey, a management consulting company, that up to half of all jobs could be automated over the next two decades.

If we do in fact see half of all curren...

Bitcoin, Efficient Markets, and Efficient Financial Sectors

John Quiggin had a good piece in the NYT, pointing out how the sky high valuations of Bitcoin undermine the efficient market hypothesis that plays a central role in much economic theory. In the strong form we can count on markets to direct capital to its best possible uses. This means that government interventions of various types will lead to a less efficient allocation of capital and therefore slower economic growth.

Quiggin points out that this view is hard to reconcile with the dot-com bu...