Dean Baker's Blog, page 138

Paul Ryan Hates the Idea of a Free Market in Health Care, He Wants to Give Money to Rich People

The NYT is again spreading the absurd myth that Paul Ryan and other Republicans want a free market in health care. While it is very helpful to the Republicans to imply that they are trying to advance some grand principle, as opposed to just giving money to rich people, it is a lie on a par with climate denialism.

There are no government-granted patent monopolies in a free market. As a result of these government granted monopolies, we will pay more than $440 billion for prescription drugs this...

Wage Growth Slows Sharply

If the Fed is really targeting 2.0 percent inflation, it is hard to understand why it would be considering further interest rate hikes. Inflation has been slowing in recent months, to a rate of just 1.4 percent in the core personal consumption expenditure deflator. The June jobs report gave more evidence that wage growth is slowing as well. The figure below shows the annualized rate of inflation taking the average hourly wage for the last three months (April, May, and June), compared with the...

Boss Paying $9.25 an Hour Sometimes Wishes There Was a Higher Unemployment Rate

Yes, that is what he said. You can read about it in the NYT. The annualized rate of wage growth in the last three months compared with the prior three months was just 2.0 percent. So, if there is a problem with getting qualified workers it seems to be primarily in the human resources department.

Vancouver Vacancy Tax Hits Real Estate Market, But Won't Affect Rents

In order to reduce speculation in its housing market, the city of Vancouver imposed a vacant property tax. People would be assessed an additional tax if a house or apartment was left vacant for a long period of time. (Yes, this is one of my pet ideas, so it makes my day to see Vancouver moving ahead with the vacancy tax.)

In addition to reducing speculation it might be expected that the tax would reduce rents by making more units available. But CBC says it ain't so, there will be more supply...

Does the NYT Have to Call them "Free" Trade Agreements?

The magic word shows up yet again in an NYT piece on a trade agreement being negotiated between Japan and the European Union. While the deal clearly includes some moves towards trade liberalization, which are discussed in the piece, it likely also includes measures for stronger and longer protections for patents, copyrights, and other forms of intellectual property. These protectionist measures may well outweigh the liberalizing effect of reductions in tariffs and other conventional barriers...

Oil Exports are Not the Same as Net Oil Exports

An NYT piece on the growth of oil exports may have given readers a misleading impression of the state of the U.S. oil industry. The piece was headlined, "oil exports, illegal for decades, now fuel a Texas port boom." It told readers:

"Oil exports grew slowly through most of 2016, but this year there has been a surge reaching 1.3 million barrels a day — roughly 15 percent of domestic production — which even at today’s depressed prices is worth more than $1.5 billion a month."

It is worth not...

In European Union-Japan Trade Deal, Tariff Reduction Unlikely to Be Good for Car Makers in Both Blocs

Lower tariff barriers generally benefit consumers in the form of lower prices. If they don't increase overall unemployment, they will lead to gains for the economy as a whole. However, there will almost always be specific industries that are losers. This is why it is a bit strange to read in a NYT article on a prospective trade deal between the European Union (EU) and Japan:

"Among other things, the pact would eliminate a 10 percent duty that the E.U. imposes on Japanese car imports, while re...

Paul Krugman Warns Us of the Terror of Tariffs

Donald Trump is apparently considering imposing some tariffs on some imports from our trading partners. This prospect has many folks, including Paul Krugman, terrified. I don’t share his fear.

Before getting into any substance, I should be clear, I have no idea what Trump may be planning by way of tariffs. During the campaign he threatened to put a 35 percent tariff on imports from Mexico and 45 percent tariffs on imports from China. These tariffs would in fact be scary. They would certainly...

Washington Post Propagates Myth on Health Insurance in Piece Exposing Myths on Health Insurance

In her column on "Five Myths About Health Insurance," health economics professor Alexis Pozen pushes a common myth. As part of myth number five, Pozen tells readers;

"Although firms may boast about offering generous health-care benefits, the costs of coverage are largely borne by employees, in the form of lower wages than a competitive market would otherwise support. That helps explain why inflation-adjusted wages have remained flat, even while productivity has increased — it’s all going to c...

How Much Will the Price of Beer Go Up in Response to Tariffs on Aluminum?

That's the question millions are asking after reading a NYT article on the state of the U.S. aluminum industry. The article notes that an increasing share of alumunim is imported, mostly from Iceland and other countries with low cost electricity. (The industry uses huge amounts of electricity.) However it also points out that China is getting a growing share of the market and the industry claims that the Chinese firms are subsidized by the government. The industry and steelworkers union are a...