Dean Baker's Blog, page 123

Ben Bernanke Wouldn't Have to Worry if Trade Were More Balanced

Robert Samuelson used his column to relate concerns expressed by former Fed chair Ben Bernanke that the Fed would lack the ability to fuel a recovery when the United States next falls into a recession. Although Samuelson doesn't go into detail, the background here is that the country has faced a persistent shortfall of demand at least since the collapse of the housing bubble.

One way this shortfall can be filled is with larger budget deficits. Unfortunately, there is intense political opposit...

Will a Revised NAFTA Make It Impossible to Hold Facebook Accountable for Fake Political Ads?

This is a question that people should be asking, as there is a considerable effort to include digital commerce in a revised NAFTA argument, as argued in a NYT column by former Secretary of State George Schultz and Pedro Aspe a former secretary of finance in Mexico. For example, the rules on digital commerce may prevent countries from imposing punitive damages, similar to what exist for copyright infringement under the Digital Millennium Copyright Act, for spreading fake ads. This is a realist...

Trump Proposes to Give More Money to Insurers by Ending Subsidy to Insurers

Donald Trump has justified his decision to ending a subsidy for insurers providing improved coverage for moderate income households by saying that he wanted to end subsidies for insurers. Actually, because insurers are required under the Affordable Care Act to provide these subsidies to moderate income households whether or not they receive the government subsidies, Trump's decision will likely lead to higher premiums. And, since the subsidy provided to moderate income households depends on t...

Patent Monopolies Lead to Corruption #54,358: The Case of Opioids

The Washington Post had a lengthy piece on the intense lobbying efforts by the pharmaceutical industry, along with retail drug store chains, to block legislation that would have imposed stronger penalties for improperly prescribing and distributing opioids. While the piece provides considerable detail on the efforts of specific actors to intervene with members of Congress to weaken legislation, it neglects to mention the importance of patent monopolies in this picture.

As everyone who has tak...

When It Comes to Trade, the NYT is Far More Confused Than Iowa Voters

For four decades the United States has actively pursued a trade policy designed to put manufacturing workers directly in competition with low-paid workers in the developing world, while largely protecting doctors and other highly paid professionals. It has also sought to impose longer and stronger patent, copyright, and related protections on our trading partners, as it strengthened these protections at home also.

The predicted and actual effect of these policies is to redistribute income fro...

Obama Smashes Trump on Trump's Bizarre New Metric

Donald Trump came up with a new measure this week when he compared the wealth created by a rising stock market with the government debt. It is not clear how much the president has to do with stock valuations, but arguably his promised tax cuts may be a factor pushing the market higher.

In principle, stock prices are supposed to reflect the discounted value of future profits, so if people come to think that Trump will give corporate America more money at the expense of those who own little or...

The "Young Invincibles" Myth Refuses to Die

For many years before and after the Affordable Care Act went into effect, many policy-types argued that its success or failure would depend on whether the "young invincibles" would sign up for health care insurance. The argument was that the system needed premiums from young people with few medical expenses in order to balance out the cost of providing care to less healthy people.

The problem with this story is that it is not just young people who have low medical expenses: most older people...

NYT Column Shows Cost of Protectionism: The Case of Copyrights

The same day that it ran a front page story that hyped fears of huge tariffs in the event that NAFTA is repealed, the NYT ran a column highlighting the problems of protectionism. Incredibly, the column was pushing for stronger protectionism in the form of better enforcement of copyright monopolies, without any recognition that it was pushing protectionism.

This is a great example of how elite types push protectionist policies to benefit themselves, with zero recognition that they are pushing...

NYT Gets Trumpian In Support of NAFTA

A front-page NYT piece warned that Trump may actually carry through on his threat to pull out of NAFTA. In recounting the fallout from a collapse of the agreement, the paper tells readers:

"If the deal does fall apart, the United States, Canada and Mexico would revert to average tariffs that are relatively low — just a few percent in most cases. But several agricultural products would face much higher duties. American farmers would see a 25 percent tariff on shipments of beef, 45 percen...

Why Is It So Hard to Distinguish Technology Policy from Technology?

Eduardo Porter had an interesting on how smaller cities are less resilient to economic shocks to larger ones. As a result they have been losing jobs and people, while larger cities have been gaining them. While the piece makes many interesting points it is misleading in describing this pattern as a natural outcome from technology:

"As technology continues to make inroads into the economy — transforming industries from energy and retail to health care and transportation — it bodes ill f...