Dean Baker's Blog, page 171

Pharmaceutical Executives Indicted: Protectionism Leads to Corruption #43,641

Every economist in the world can quickly explain how a 10 percent tariff on imported steel will lead to corruption. The same logic applies to drug patents, although since they are the equivalent of tariffs many thousand percent (they typically raise the price of protected drugs by factors of ten or even 100 or more), the incentives for corruption are much greater.

This is why every economist in the world should have been nodding their heads saying "I told you so" when they read this NYT artic...

The 1970s In the Washington Post and the Real World 1970s

Sebastian Mallaby use his Washington Post column to warn readers that the fiscal stimulus from a Trump administration, in the form of stimulus spending and tax cuts, could lead to too much demand in the economy. The result will be higher interest rates and higher inflation. And then things might get really bad:

"The economy would spiral back toward the stagflationary 1970s. It is too dark a prospect to believe. But the logic that takes us from here to there is chillingly straightforward."

W...

If You Thought a Trump Presidency Was Bad ….

The Washington Post editorial page decided to lecture readers on the meaning of progressivism. Okay, that is nowhere near as bad as a Trump presidency, but really, did we need this?

The editorial gives us a potpourri of neo-liberal (yes, the term is appropriate here) platitudes, all of which we have heard many times before and are best half true. For framing, the villains are Bernie Sanders and Elizabeth Warren who it tells us “are embracing principles that are not genuinely progressive.”

I’l...

Issue is Trade Deals, Not Trade

The NYT bizarrely equated trade with trade agreements in an article on a debate within the Democratic Party over its future policy course. The piece referred to Senator Bernie Sanders' opposition to recent trade pacts then presented a quote from Colorado Governor John Hickenlooper:

"I don’t think you can be anti-trade...In the modern world, we need consumers overseas for our products as well."

Of course Sanders has never indicated he was against trade, nor has any prominent figure in this d...

Contrary to What You Hear in the News, Small Businesses Don't Think They Have Problems Getting Credit

One of the great myths perpetuated by the right is that Dodd-Frank and other financial regulations by the Obama administration are preventing the financial sector from functioning. As a result, small businesses supposedly can't get the credit they need to grow or even survive. University of Maryland economist Peter Morici made this argument in a Morning Edition segment in a debate with my friend Jared Bernstein.

There is actually a simple response to this claim: it's not true. The National Fe...

In the Electoral College White Votes Matter More

Lara Merling and Dean Baker

For the second time in the last five elections we are seeing a situation where the candidate who came in second in the popular vote ends up in the White House. This is of course due to the Electoral College.

As just about everyone knows, the Electoral College can lead to this result since it follows a winner take all rule (with the exception of Nebraska and Maine). A candidate gets all the electoral votes of a state whether they win it by one vote or one million....

Trade, Trump, and Profit Shares

The NYT had an interesting piece that focused on the Carrier air conditioner factory in Indianapolis, Indiana that the company is closing and moving to Mexico. The piece describes the impact on the city and the people who work in the factory, many of whom apparently voted for Donald Trump in the hope that he would save their jobs.

One item in the story is somewhat misleading. The piece presents the views of John Van Reenen, an economist at M.I.T.:

"'These are fundamental forces that have more...

Surviving the Age of Trump

I will claim no special insight into the politics that led to Trump’s election Tuesday. I was as surprised as anyone else when not just Florida and North Carolina, but also Pennsylvania, Michigan, and Wisconsin started to turn red. But that’s history now. We have to live with the fact of President Trump and we have to figure out how to protect as much as possible of what we value in this country from his presidency.

This won’t be easy when the Republicans control both houses of Congress and w...

Mainstream Economics Wrecks World Economy and Now NYT Worries About Damage from Populism

The NYT ran a piece with the headline, "Trump rides a wave of populist fury that may damage global prosperity." The headline is absolutely bizarre for the simple reason that we are not seeing anything that a serious person can call "global prosperity." Thanks to the austerity policies pursued across much of the across Europe, and to a lesser extent the United States, countries across the developing world have seen a decade of weak or even negative growth. The employment rate of prime age work...

The High Price of the Trans-Pacific Partnership

It will be very hard to get used to the two words “President Trump,” but somehow we will have to figure out a way to survive and keep the country and world intact for the next four years. There are many factors behind the rise of Donald Trump. Clearly, a big part of Trump’s appeal lay in his open expressions of racism, xenophobia, and misogyny.

But this is not the whole story. Many of the white working class people who voted for Trump yesterday voted for Barack Obama just four years earlier....