Dean Baker's Blog, page 122

Inventories and Robots: Missing Story in Third Quarter GDP

It seems the folks reporting on the third quarter GDP forgot to do their homework. The articles touted the 3.0 percent growth figure, which was somewhat stronger than generally expected. However much of the basis for this stronger than expected growth was a pick-up in inventory accumulations that added 0.73 percentage points to the growth rate in the quarter. The growth in final demand was just 2.3 percent.

It is common to look at final demand growth, which excludes inventory changes, both be...

Response to Doctors Unhappy Over the Idea They Get Paid Too Much

Earlier this week I had a column in Politico pointing out that doctors in the United States get paid roughly twice as much as their counterparts in other wealthy countries and that we could save almost $100 billion a year ($700 per family) if we got doctors pay in line with their pay elsewhere by opening up the market. This made many folks (most identifying themselves as doctors) angry, as they let me know with e-mails, tweets, facebook comments and various other outlets. My response to these...

Roger Altman Is Confused: Policy Has Led to Inequality, not the Natural Workings of the Economy

Roger Altman, an investment banker and deputy treasury secretary under President Clinton, warned about the effect of growing inequality on national politics in a Washington Post column. He implies that this increase in inequality has been a natural outcome of the market:

"A series of powerful, entrenched factors have brought the American Dream to an end. Economists generally cite globalization, accelerating technology, increased income inequality and the decline of unions. What’s noteworthy...

It's Not Debt That Keeps the U.S. from Investing in Education and Infrastructure

Fareed Zakaria pushes the pet myth of the arithmetically challenged elite (yes, that is probably redundant) that the federal debt is limiting spending for many important ends in his column this morning.

"It is politically paralyzed, unable to make major decisions. Amidst a ballooning debt, its investments in education, infrastructure, and science and technology are seriously lacking."

Arithmetic fans would evaluate this assertion by looking for evidence that the debt is causing problems suc...

I Am Out of Here

I'm off on vacation. I'll be back October 27. So remember, don't believe anything you read in the papers until then.

Study Finds that Reversing NAFTA Would Lead to Gains In Productivity for All Three Countries

Trade deals are usually thought to increase productivity by allowing countries to benefit from comparative advantage, where each country concentrates on the areas where it is relatively more efficient. For this reason it is striking that a study on the impact of reversing NAFTA that was cited in a NYT article found that the United States, Canada, and Mexico would all see an increase in productivity if NAFTA was reversed.

While both the article and the study highlighted the number of jobs that...

Democrats Used to Be the Party of Slavery: Doug Schoen Pushes the Case for Keeping the Democratic Party Allied with Wall Street

Doug Schoen, a former consultant to Bill Clinton, argued the case that the Democrats should keep their ties to Wall Street in a NYT column this morning. While he does advance his argument with some red-baiting and bad logic, he uses tradition as a starting point.

"Many of the most prominent voices in the Democratic Party, led by Bernie Sanders, are advocating wealth redistribution through higher taxes and Medicare for all, and demonizing banks and Wall Street.

"Memories in politics are short,...

Thomas Friedman Pushes the TPP Joke

When it became impossible to sell the Trans-Pacific Partnership (TPP) on its economic merits, proponents of the deal began to argue for it as a way to contain China's power in the region. Thomas Friedman picks up this line and runs with it in his latest column.

"Trump came into office vowing to end the trade imbalance with China — a worthy goal. And what was his first move? To tear up the Trans-Pacific Partnership, the trade deal that would have put the U.S. at the helm of a 12-nation tradin...

David Brooks Goes Into Full Name Calling Mode

No regular reader of the NYT expects great insights from David Brooks, but the sort of name-calling in today's column is the sort of thing one expects from a grade schooler. It turns out that if you don't agree with Brooks' view of the world you are a "downswinger," you have gone from a "optimistic, progress-embracing view toward a pessimistic, system-doubting view."

Well hey, who wants to be a downswinging pessimist, as opposed to someone who embraces progress? How about we instead divide th...

Confusion on Profits, Wages, and Taxes at the White House

The White House is pushing the line that their proposed cut to corporate tax rates will lead to an increase in average household income of more than $4,000.

“Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually. The increases recur each year, and the estimated total value of corporate tax reform for the average U.S. household is therefore subst...