Dean Baker's Blog, page 133

Have We Learned Our Lessons from the Financial Crisis? Rewriting History Is Not a Good Sign

I was listening to a BBC radio news show this morning in which they proclaimed today as the 10th anniversary of the beginning of the financial crisis based on the date in 2007 when the French bank BNP Paribas first blocked withdrawals from hedge funds that specialized in U.S. mortgage debt. The show then said that following this move house prices began dropping.

Really, folks? House prices began falling after this date? That's not what the data show.

At the most aggregate level, the Case...

Trump Takes Credit for Redistributing From Workers and Communities to Corporations

Donald Trump has been anxious to take credit for the sharp run-up in stock prices since his election. While it is not clear that anything really lies behind this run-up (remember Wall Street investors are the same folks who thought AOL.com was worth $250 billion back in 2001 and that subprime mortgage backed securities were perfectly safe assets), in principle stock prices are supposed to represent the present value of future corporate profits. If we assume that the rise in stock prices actua...

The Simple Clean Route on Corporate Tax Reform

Since several people have asked, I thought I would do some recycling. My plan (which I know I have stolen from someone) is to require companies to turn over an amount of stock, in the form of non-voting shares, roughly equal to the targeted tax rate. This means if we're shooting for a 28 percent tax rate, then the shares going to the government are equal to 28 percent of the total. If the target is 20 percent, then the government's shares are equal to 20 percent of the total.

From that point...

Is the NYT Required to Lie to Push Trade Agreements?

I understand people can have reasonable differences of opinion on trade deals like the Trans-Pacific Partnership (TPP), but why is it that the proponents have to insist, with zero evidence, that not doing the deal was an economic disaster? Yes, I know the political argument, which seemed to arise late in the game, that U.S. standing in the world has collapsed because we didn't folllow through on the TPP. But, let's just stick with the economics.

Yesterday, Politico ran a lengthy piece saying...

Media Continue to Mourn the Loss of the Trans-Pacific Partnership

Politico gets into the act telling readers how tragic the demise of the Trans-Pacific Partnership (TPP) is for the rural economy in a special report. Here's the punch line:

"But for the already struggling agricultural sector, the sprawling 12-nation TPP, covering 40 percent of the world’s economy, was a lifeline. It was a chance to erase punishing tariffs that restricted the United States—the onetime 'breadbasket of the world'—from selling its meats, grains and dairy products to massive impor...

With Automation Slowing to a Crawl, Washington Post Features Major Front Page Article on Automation

According to the Bureau of Labor Statistics, productivity growth, especially in manufacturing, has slowed to a record slow pace. In light of this fact, the Washington Post naturally decided to run a major front page article, jumping to two full inside pages, on automation.

It would be good if were seeing more rapid productivity growth. It would mean that we could enjoy higher wages and/or shorter hours. The Fed could also stop raising interest rates, since it wouldn't have to worry so much ab...

The Trade Deficit: the Cause of Secular Stagnation

In his NYT column on whether the turmoil of Trump's presidency is slowing economic growth, Neil Gross refers to concerns about "secular stagnation" raised by former Treasury Secretary Larry Summers. Secular stagnation just means insufficient demand in the U.S. economy. While the column sees the major cause as weak investment demand, the more obvious cause of secular stagnation is the U.S. trade deficit.

The trade deficit is running at annual rate of more than $540 billion a year, close to 2.8...

Foreign Investment in U.S. and Imports are Substitutes

It is strange how the media often respond to the prospects of tariffs on imports by pointing to foreign owned factories in the United States, implying that these are somehow at risk if tariffs are imposed. The NYT gives us an example of this reporting today in a front page article.

The piece highlights a number of foreign owned factories in the United States and includes data on foreign direct investment by country and also employment levels. It also includes the warning:

"But political and b...

France's Malaise Doesn't Keep It from Employing a Larger Share of Prime-Age Workers than U.S.

It's standard practice in news stories to refer to France's economy as a basket case. The NYT went this route in an article on President Emmanuel Macron's efforts to rewrite the country's labor laws.

The article refers to Macron's efforts to "revitalize" the French economy and then tells readers:

"The code is regarded by many as the wellspring of the country’s malaise and the chief obstacle to generating jobs, leaving the country with an unemployment rate that hovers persistently around 10 p...

France's Malaise Doesn't Keep It from Employing a Larger Share of Prime Age Workers than U.S.

It's standard practice in news stories to refer to France's economy as a basket case. The NYT went this route in an article on President Emmanuel Macron's efforts to rewrite the country's labor laws.

The article refer's Macron's efforts to "revitalize" the French economy and then tells readers:

"The code is regarded by many as the wellspring of the country’s malaise and the chief obstacle to generating jobs, leaving the country with an unemployment rate that hovers persistently around 10 perc...