Dean Baker's Blog, page 143

Full Employment: Are We There Yet?

That's the question that Neil Irwin poses in his Upshot piece. He points to the drop in the unemployment rate to 4.3 percent, coupled with a drop in the labor force participation rate, and the weak job growth of the last three months. The argument is that these factors taken together could mean that there just are not that many more people interested in working. 

This is a possibility, but there are some important data points pointing in the opposite direction. First, it is worth noting...

Trump's Climate Job Numbers are Mainstream Economics

The NYT rightly criticized Donald Trump's decision to pull the U.S. out of the Paris climate agreement, but part of its criticism is not right. It dismissed the idea that reducing greenhouse gas emissions would lead to job loss as "nonsense" that comes from "industry-friendly sources." While the claim that reducing greenhouse gas emissions will lead to job loss may be nonsense, it is, in fact, the result that comes from standard economic models that are used all the time to project the impact...

Great News for Vietnam, It Can Still Get Almost All the Gains Promised by the TPP!

The Washington Post shamelessly uses both its news and opinion pages to push trade agreements. It famously even lied about Mexico's GDP growth to tout the benefits of NAFTA, absurdly claiming it had quadrupled between 1987 and 2007 (the actual figure was 83 percent, according to the International Monetary Fund).

Given this background, it's not surprising to see a piece that bemoaned the fact that Vietnam will not be able to get the large gains from the Trans-Pacific Partnership (TPP) projecte...

Another Zombie Myth: CBO Was Too Pessimistic, not Too Optimistic About Obamacare

I kind of love how ridiculous things get repeated endlessly by people who claim to be informed. In his NYT column, Avik Roy warned us against taking seriously the Congressional Budget Office's (CBO) projections of a surge in the uninsured under the Republican health care plan.

"First, some caution regarding the C.B.O.’s numbers. The C.B.O. is chock-full of committed and talented public servants, but the agency is neither omniscient nor infallible. In 2010, when the Affordable Care Act was si...

Does the NYT Think that China's Trade Surplus with the United States is Five Times Mammoth?

Using arithmetic in economic policy debates is always dangerous, but that would seem to be the implication of the NYT's designation of Germany's $64.8 billion trade surplus with the United States as "mammoth." Since China's $347.0 billion trade surplus was more than five times as large, it would seem that China's surplus has to be five times massive. It usually is not talked about that way in the NYT and elsewhere.

Remarkably, the piece never focused on the real explanation for Germany's...

Core Inflation, Minus Housing, Races to 1.0 Percent

Housing rent has been outpacing the overall rate of inflation in recent years. This is worth noting both because it is a large portion of the consumption basket and rents do not tend to follow other prices. Rent is primarily a function of the shortage of available units. It does not respond in any immediate way to wage pressures, like other components in the consumption basket. Rental inflation will also not be slowed by higher interest rates. In fact, by reducing construction, higher interes...

Amazing Finding! It is Possible for Drug Companies to Innovate Working on Government Contracts

There is a widely held view among policy types that drug companies would act like total morons if they did research under a government contract as opposed to having the lure of a patent monopoly. Apparently, this is not true, since it seems that the French drug company Sanofi has developed an effective vaccine doing research that was funded by the U.S. Army. So the theory of knowledge holding that otherwise intelligent people become worthless hacks in the process of drug development if the go...

The Best Way To Bring Down Drug Prices, Don't Grant Patent Monopolies

The NYT ran a piece discussing the efforts by various industry groups to ensure that they are not hurt by measures that reduce prescription drug prices. At one point, it listed some of these measures, noting a bill co-sponsored by Senator Bernie Sanders, which would allow drugs to be imported from Canada.

It is worth noting that this bill, which is co-sponsored by sixteen other senators including Elizabeth Warren, Sherrod Brown, and Kirsten Gillibrand, also includes mechanisms that would redu...

Holy Lack of Inflation Adjustments: Story of Europe is Much Worse than NYT Tells You

Okay, it's Memorial Day weekend and maybe the regular crew is on vacation at the NYT, but come on, you don't print GDP growth numbers without adjusting for inflation. The NYT committed this cardinal sin in a column by Simon Tilford telling readers that the United Kingdom actually has a pretty mediocre economy that is likely to perform even worse post-Brexit.

While I'm inclined to agree with the basic argument (with the qualification that there may be a dividend from sinking the financial sect...

Actually, Retirement Security is not Looking So Good

Andrew Biggs, an economist at the American Enterprise Institute, had a piece in The Hill telling readers that the private 401(k) system is doing just great, while public pension plans and Social Security are in big trouble. The story is we need not worry about most people’s retirement security, we have to worry about the cost of the public retirement system.

There are a few parts of Biggs’ story that don’t quite hold up. Biggs tells us:

“A 2016 Census Bureau study found that — thanks to a 75...