Dean Baker's Blog, page 109

NYT Story on Tearing Down Public Housing Is Seriously Misleading

NYT Magazine had an interesting piece on the experience of a woman and her family who were forced out of the Cabrini-Green housing project in Chicago when it was torn down in 2010. The article tells readers that she was unhappy to be forced to leave an apartment that had been her home for more than two decades and where she had raised 13 children. The experience of her and her family in the public housing to which they were relocated proved disastrous, and she ended up dying a seemingly preve...

More on That Budget Deal Worked Out In the Senate: Suppose the NYT Cared About Informing Readers

My modest additions to five paragraphs of the NYT article on the budget deal:

"The deal would raise the spending caps by about $300 billion over two years (3.5 percent of projected spending), according to a congressional aide. The limit on military spending would be increased by $80 billion in the current fiscal year (2.0 percent of spending) and $85 billion in the next year (1.9 percent of spending), which begins Oct. 1, the aide said. The limit on nondefense spending would increase by $63...

Why Did the Market Crash? More Effort to Explain What Didn't Happen

It seems the world's financial markets have stabilized for now, but we're still seeing all the pieces that were written with the expectation of a further plunge that were already in the pipeline, such as this front page piece in the NYT. I don't mean to mock all these writings. The market certainly could take another plunge since prices are high, but they do provide a useful way to see the extent to which people are focused on real versus imagined fears.

As I have noted elsewhere, the obsessi...

Let's Play Why Did the Market Fall?

Yes boys and girls, it's time to play "Why Did the Market Fall?" This is when you get to blame who or whatever you like for the big plunge in the market that began last Friday (now largely reversed).

I want to blame the partial unwinding of the Affordable Care Act, which is likely to leave millions more uninsured and tens of millions paying more for their health care. I have a friend who wants to blame her uncle's bad breath. Then there is Andrew Sorkin at the NYT who tells us that investors...

Taking Issue with Paul Krugman, We're Still Not at Full Employment

I have to disagree with Paul Krugman on his assessment of the current state of the economy. While I would agree with most of his comments about the state of the stock market and housing market, and also the competence of the Trump administration, I think he is wrong in saying that we are at or near full employment.

There are a few points to be made here. First. Krugman rightly notes the aging of the population pushing down the overall labor force participation rates. However, employment to po...

More Thoughts on the Stock Crash

Before anyone starts jumping off buildings, let me give you a few items to think about.

1) The stock market is not the economy. It moves in mysterious ways that often have little or nothing to do with the economy. In October of 1987 it plunged more than 20 percent in a single day. GDP grew 4.2 percent in 1988 and 3.7 percent in 1989. The market did recover much of its value over this period, but we don't know whether or not it will recover the ground lost in the last week either.

2) The marke...

It Actually Doesn't Feel at All Like 2006: Refusing to Learn the Lesson of the Housing Bubble

Heather Long had a column in the Washington Post telling us that "it feels like 2006." As someone who did his best to warn of impending disaster in 2006, I can say that it doesn't look at all like 2006. It is frustrating, but perhaps not surprising, that the economics profession and economic reporters have done their best to learn absolutely nothing about their enormous mistakes at that times. (Fortunately for them, economics is not an area where people are held accountable for the quality of...

The Stock Market Plunges, a Major Blow Against Inequality!

The stock market tumbled by 2.0 percent on Friday. Given that the top 1.0 percent hold a grossly disproportionate share of stock wealth, this means they took a big hit. Are we more equal as a society now?

Those who like to focus on wealth measures on inequality would have to say yes. And if the market continues to fall (not a prediction, but it certainly is possible that the correction will continue) then we will see further gain on the inequality front. Suppose it falls 30 to 40 percent, bri...

The Bonus Game: How Congress Paid Off Corporate America to Tout Its Tax Cut

The NYT had a very good piece pointing out that the bonuses promised by many corporations following the tax cut are often less consequential than they appear. For example, many companies highlighted their maximum bonus amount. This was often a figure (e.g. $1,000) that went to a full-time worker who had been with the company for twenty years or more. At a company like Walmart, very few of their workers would have been there for twenty years and many are part-time. This means that the typical...

Newer Data Showing Companies Weren't Feeling Inspired by Tax Cuts Last Year

As I have pointed out repeatedly, the Republicans story about how their corporate tax cut will benefit everyone hinges on the idea that it will kick off a huge round of new investment. In their telling, investment is hugely responsive to tax rates. This means their tax cut will spark an investment boom. The higher levels of investment will increase productivity, which will eventually lead to higher wages.

We got our first weak test of this story with the Commerce Department's release of advan...