Dean Baker's Blog, page 144

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...

Republicans are Only Opposed to Redistribution that Goes Downward

Matt O'Brien's Wonkblog piece might have misled readers on Republicans views on the role of government. O'Brien argued that the reason that the Republicans have such a hard time designing a workable health care plan is:

"Republicans are philosophically opposed to redistribution, but health care is all about redistribution."

This is completely untrue. Republicans push policies all the time that redistribute income upward. They are strong supporters of longer and stronger patent and copyright p...

Under Trump's Budget Plan Tax Payer Dollars Will Still Subsidize Masterpiece Theater and Beethoven Symphonies

Washington Post columnist Steven Pearlstein urged people to be moderate in their criticisms of the Trump budget. In obvious reference to plans to eliminate support for the Corporation for Public Broadcasting and the National Endowment for the Arts, he argues:

"I like Masterpiece Theatre and a Beethoven symphony as much as the next upper-middle-class professional, but I can see why some people might wonder why their tax dollars should subsidize my taste for British drama and classical music bu...

The Zombie "Young Invincibles" Ride Again in the Washington Post

The "young invincibles" is a myth that got created in the debate over health care reform in 2009 and 2010. Lots of media types, and more than a few policy wonks who should have known better, proclaimed the success of Obamacare depended on whether healthy young people signed up for insurance. The argument was that the premium paid by these healthy young people, since they have relatively low health care expenses, would be subsidizing the cost of caring for less healthy older people. If they di...

Reuters Article on Brazil in WaPo Is Confused on Economics and Includes Mistranslation

The Washington Post printed a Reuters article that included a major mistake in economics. The piece is about the plotting of conservative politicians and business leaders trying to plan for the likelihood that their ally, President Michel Temer, will be indicted and removed from office for corruption. It told readers:

"Amid the political turmoil that comes just a year after his predecessor was impeached and removed from office, preserving Temer’s agenda of austerity reforms and pulling Brazil...

Link Between Low Wages and Low Productivity Growth: High Wages Make Low Productivity Jobs Disappear

Neil Irwin examined recent patterns in wage growth in a NYT Upshot piece. Irwin noted the extraordinarily low 0.6 percent pace of productivity growth in recent years (where are the robots?) and argued that wage growth has actually been relatively fast. He then examines why productivity growth might be so slow.

One explanation he left out is that low wages makes it possible to hire workers at low productivity jobs. If an employer only has to pay a worker the $7.25 federal minimum wage, then it...

The Good News on Trumpcare: Hit to Private Insurers Minimized

As we know, the goal of the Trump administration is to redistribute as much income as quickly as possible to his family, friends, and people like his family and friends. This is why the centerpiece of his health care reform is more than $600 billion in tax cuts over the next decade that will go overwhelmingly to the richest one percent of the population.

But there is a flip side to these cuts. If the government is spending less money on health care, then the corporations and wealthy individual...

Mark Zuckerberg Sides With Donald Trump Against CBO and Other Economists

Ever since the Trump administration released its budget on Tuesday, economists (including me) have been ridiculing its assumption that we will see an average annual growth rate of 3.0 percent over the next decade. The Congressional Budget Office (CBO) projects an average growth rate of just under 1.9 percent for this period. This projection assumes slow labor force growth, as the baby boom cohort retires, and a continuation of the weak productivity growth we have seen over the last decade.

Th...

Would Shareholders in Charter Communications Have Less Money If They Paid Their CEO $10 Million Instead of $98 Million?

That's the question the board of directors of Charter should be asking, but I suspect they never do. The company scored first in the NYT's annual compilation of CEO pay packages, coming in almost $30 million ahead of CBS, which is number 2. Of course, if the CEOs earned less than the other top people in the corporate hierarchy would likely get smaller paychecks as well. And, it might be harder for the presidents of universities, foundations, and non-profits to explain the need for seven figur...

It's Actually Not Difficult For President Trump to Comply with Law Prohibiting Payments from Foreign Governments

The Washington Post had an article reporting on the fact that President Trump's hotels have not been consistently screening payments from foreign governments to donate to charities, as he had promised in order to comply with the constitutional ban on such payments. The article cites a document from the Trump Organization saying that it would be impractical to screen all their guests to determine which ones were representatives of foreign governments.

While this sort of screening may exceed th...