Dean Baker's Blog, page 172

The Wall Street Gang: Tom Nides' Incredibly Talented People

Alec MacGillis had an interesting profile of Tom Nides in the New Yorker. Nides is currently a top executive at Morgan Stanley who is frequently mentioned as a leading contender for Treasury Secretary or other high level position in the Clinton administration. The piece ends with this remarkable section:

"But Barney Frank, the former Democratic congressman—who, despite having co-authored Dodd-Frank, is not opposed to former Wall Street executives working in Washington—told me that, in a frie...

Yes, It's the Monday Before the Election and Robert Samuelson Wants Us to Cut Social Security

Yep, he tells us the real national embarrassment is not having a racist, sexist, xenophobic candidate as a major party presidential nominee. It's not our failure to address global warming so our kids might face a ruined planet. No, Robert Samuelson tells us our real national embarrassment is that we have an aging population and, horror of horrors, this may involve spending more money on Social Security and Medicare. Okay, let's go through his story.

Samuelson tells us:

"In 1990, those 65 and...

Ross Douthat and the Government Subsidized Life

Ross Douthat devoted his NYT column this morning to how people in the United States and other wealthy countries deal with a world in which they have fewer children. It's mostly devoted to social psychological speculation, which I will leave to others to assess, but I do want to pick up on an economic item that is a central theme.

Douthat tells readers:

"The Obama White House’s 'Life of Julia' ad campaign in 2012 — featuring a woman whose every choice was subsidized by the government from crad...

Econ 101 for Economists: Compensation Is Not Accelerating

It's often said that economists are not very good at economics. (How else could they miss the $8 trillion housing bubble that sank the economy?) Anyhow, we are getting another case proving this point in the discussion of the acceleration of wage growth following the release of the October employment report.

While it does seem that there is a modest uptick in the rate of growth of the average hourly wage, this appears to be almost entirely due to the fact that we are seeing a shift from non-wa...

Affordable Drugs: Has Carolyn Johnson Heard of the National Institutes of Health?

Carolyn Johnson has done a lot of excellent reporting on abuses and price gouging by the pharmaceutical industry, but her piece today on the "solution to the global crisis in drug prices" is more than a bit bizarre. I'll save you the suspense. The solution is a "public benefit" company which is not set up to maximize profit. (I'm not sure what prevents it from being bought out by a standard profit maximizing company, but we'll leave that one aside.)

While it is encouraging to hear some resear...

In Search of Accelerating Inflation

by Dean Baker and Lara Merling

It's no secret that many folks, including many on the Fed, want to see higher interest rates. There are a variety of arguments put forward, including the story of huge but invisible bubbles that could burst and sink the economy just like the housing bubble did in 2008.

But the argument that deserves the most credibility is the conventional one that a low rate of unemployment is creating an overtight labor market. This leads to more wage growth, which will get pa...

Rather than Dumping Unions, Democrats Could Shake Off Their Upscale Hard Core Anti-Market Stance

Thomas Edsall's NYT column contrasted the downscale white working class Trump supporters with the growing number of college educated and relatively upscale supporters of Democrats. Near the end of the piece, Edsall quotes M.I.T. economist Daron Acemoglu:

"As long as the Democratic Party shakes off its hard-core anti-market, pro-union stance, there is a huge constituency of well-educated, socially conscious Americans that will join in."

Rather than completely abandon its base in the working...

New York Times Misrepresents Falling Oil Prices to Push Protectionism to Benefit Rich

The promoters of "free trade" are feeling frustrated these days. Their trade deals are facing large-scale public opposition everywhere. This opposition almost derailed a trade deal between Canada and the European Union. In the United States, both major party candidates are openly opposed to the Trans-Pacific Partnership (TPP).

The NYT recognizes some of the problems in recent trade pacts, but still badly misrepresents the key issues in an editorial on trade. The misrepresentation picks up a r...

Trends in Trade, the Story Is Not so Simple

The NYT had an interesting article arguing that trade has stopped growing in the last couple of years. The piece notes data showing that combined U.S. exports and imports fell in the 2015 compared to 2014 and seem likely to fall again in 2016. It then raises the concern that this will lead to slower growth going forward. There are a couple of points that complicate this issue.

The first is that the drop in the dollar value of trade is the result of lower prices, not a smaller volume of goods...

Are We At Full Employment? State EPOPs Suggest Otherwise

By Lara Merling

The official unemployment rate in the U.S. is currently estimated at 5 percent, a number that is sufficiently low for some to claim that the economy is at full employment. The unemployment rate varies significantly across states. Between September 2015 and March 2016 the unemployment rate has averaged 2.8 percent in North Dakota, 3 percent in Hawaii and New Hampshire, while in West Virginia it was at 6.4 percent, and in Washington DC, and Alaska it averaged 6.6 percent.

Once t...