Dean Baker's Blog, page 159

Contrary to What Robert Samuelson Says We Did Bail Out the Bankers and Did Not Prevent a Second Great Depression

Robert Samuelson is unhappy that people continue to believe something that is true — that we bailed out the bankers — and happy that people still believe something that is not true — that we prevented a second Great Depression. In his column Samuelson complains:

"The real Dodd-Frank scandal is that this misinterpretation of events, widely embraced by both parties, has been allowed to stand. In many bailouts, banks’ shareholders suffered huge losses or were wiped out; similarly, top...

Neil Irwin Warns of Financial Crisis from Corporate Tax Reform

This is really getting over the top. Republicans in Congress are debating an overhaul of the corporate income tax which would eliminate many of the opportunities for gaming the current tax code. To my mind this is great news, because the tax gaming industry is where many of the richest people in the country, like private equity fund partners, make their money.

This means that the current corporate tax code is a mechanism for transferring money from the rest of us to the likes of Mitt Romney a...

Justin Wolfers Is Mistaken, Restrictions on Firing Don't Have to Reduce Employment

Donald Trump has used his podium on several occasions to harangue companies about moving jobs overseas. This is probably not an effective way to conduct economic policy, but Justin Wolfers misled NYT readers in claiming:

"Research shows that efforts to boost employment by making it difficult or costly to fire workers have backfired. The prospect of a costly and lengthy legal battle for laid-off employees makes it less appealing to hire new workers. The result has been that higher firing cost...

The Toll of Austerity in Europe

The NYT had an interesting piece giving profiles of several young people who are struggling to find full time jobs in Europe. All of the people profiled have college degrees, several have considerably more education.

While the article notes that the situation faced by these young people is the result of the weak economy following the crash in 2008, it would have been helpful to point out that this weakness is the result of policy choices by Europe's leaders. They have deliberately decided to...

Why Do Proponents of More Immigration Never Mention Doctors?

It really is hard to understand, the potential gains are enormous. If we got the pay of our doctors down to the levels in other wealthy countries it could save us close to $100 billion a year. Our doctors average more than $250,000 (that's after paying for malpractice insurance and other expenses), with doctors in places like Germany and Canada getting about half of this amount. 

The barriers may not be as large in other highly paid professions (we prohibit foreign doctors from practicin...

Thomas Friedman Says Donald Trump Could Boost Productivity Growth by Ending NAFTA

Economists have been worried about the weak productivity growth of the last decade, with some worried it will continue indefinitely. In the last decade, productivity growth has averaged less than 1.0 percent annually. This compares to a rate of close to 3.0 percent a year in the decade from 1995 to 2005 as well as the quarter century from 1947 to 1973. Slower productivity growth limits the extent to which wages can rise, except through redistribution.

However, Thomas Friedman apparently belie...

Mis-measured Growth: Will Our Children Be Rich?

The NYT ran a piece discussing the possibility that we are substantially undercounting growth because we aren't incorporating the benefits of many things we can now get for free, like information over the Internet. There are many interesting issues here, although it is difficult to believe the uncounted benefits add much to growth. We also have uncounted costs, like paying for the cell phone and Internet service that you need now to stay in communication with friends and family. We also have...

Affordable Care Act Allowed Millions of People to Work Part-Time Rather Than Full-Time

Margot Katz-Sanger left this point out of her scorecard on Obamacare. Since people are now able to get inursance through the exchanges, they are no longer dependent on getting it from their employer, which usually means working a full-time job. As a result, the number of people choosing to work part-time has risen by more than 2 million since the law went into effect. The people benefiting have disproportionately been young parents and older workers who are too young to qualify for Medicare.

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It's Not Donald Trump's Economy Yet

Yahoo ran a piece pointing out that it didn't really make sense for Donald Trump to take credit for the jobs report released on Friday since the survey on which the report is based was taken in the middle of January, before he was in the White House. The piece concludes by telling readers:

"So while Trump can’t be blamed for disappointing data or take credit for a good report, next month is all his!"

While the first point is entirely correct, it doesn't really make sense to give a presid...

Steven Pearlstein Accuses U.S. Government of Payoffs to Drug Companies for Jobs

It's not clear that this is what he intended to do in a column that rightly criticized Donald Trump for quickly abandoning his pledge to force drug companies to lower prices, but it is what he did. Pearlstein asserts:

"Because ours is the only country that does not negotiate prices with drug companies, using a national formulary, Americans pay roughly twice what patients in other countries do for the most widely used drugs still under patent. What that means, in effect, is that Americans pay...