Dean Baker's Blog, page 18

The Price of Wheat Doesn’t Tell Us About the Strength of the Economy and Neither Does the Stock Market: Why Is This so Hard for Intellectual Types to Understand?

The stock market tells us about the expected value of future after-tax corporate profits. At least, that is when it tells us anything at all.

That is not radical lefty ranting, that is from the Econ textbook. If the economy is expected to boom next year, because Joe Biden is going to use the revenue from a big corporate profits tax to finance huge investment in green projects, there is no reason to expect the stock market to rise. People will not pay more money for shares of Microsoft, GE, or an...

Dealing with a Pandemic as If Human Lives Mattered

It’s fair to say that the U.S. performance in dealing with the pandemic has been disastrous. With the effort led by Donald Trump, this is not surprising. His main, if not only, concern was keeping up appearances. Preventing the spread of the pandemic, and needless death, was obviously not part of his agenda.

Unfortunately, many other wealthy countries, like France, Belgium, and Sweden, have not done much better. They don’t have the excuse of having a saboteur in charge who was actively trying to...

The Robinhood/GameStop “Scandal”

As I understand it, there are many folks out there who think that we saw some major sleaze by the Wall Street big boys, screwing the little guy, when Robinhood stopped taking buy orders on GameStop, as the stock was soaring to record highs. They resumed taking buy order after a pause of a day or so.

The story is that this allowed for Robinhood’s hedge fund friends to get out of their short positions, thereby saving themselves from huge losses. Yet another case of the big money Wall Street crew r...

The GameStop Game and Financial Transactions Taxes

The Wall Street crew is furious over the masses at Robinhood and Reddit ruining their games with their mass buying of GameStop, which wiped out the short position of a big hedge fund. The Robinhood/Reddit masses are touting this as a victory over Wall Street. The Wall Street insiders are decrying this effort to turn the market into a casino. It’s worth sorting this one out a bit and answering the question everyone is asking (or should be), would a financial transactions tax fix this problem.

Fir...

Quick Thoughts on the “Evils” of Share Buybacks

This is a Twitter thread from a couple of months back. I thought I would post it here since there may be some interest.

Someone sent me a diatribe from some progressive about the evil of share buybacks. I have a few thoughts.

First the claims: they allow companies to inflate share prices, top management to manipulate share prices to maximize the value of options, divert money from long-term investment, and allow for tax avoidance. I’ll start with the tax story.

Buybacks, as opposed to dividends,...

Quick Thoughts on the Minimum Wage

President Biden’s proposal to raise the minimum wage to $15 an hour by 2025 is prompting a backlash from the usual suspects. As we hear the cries about how this will be the end of the world for small businesses and lead to massive unemployment, especially for young workers, minorities, and the less-educated, there are a few points worth keeping in mind.

While $15 an hour is a large increase from the current $7.25 an hour, this is because we’ve allowed so much time to pass since the last minimum ...

Thomas Friedman: The Donald Trump of the New York Times

Donald Trump is a person who glories in his own ignorance. He seems to know little about anything and clearly doesn’t care. Any evidence that contradicts his pronouncements is simply “FAKE NEWS.”

Thomas Friedman seems to have the same attitude as he makes grand pronouncements about the economy that are transparently absurd. I discovered this in his latest column, which carried the promising headline, “Made in the U.S.A.: Socialism for the Rich. Capitalism for the Rest.”

It turns out that the gis...

The Coronavirus Vaccine Fail and International Elites

The vaccine rollout process has been painfully slow in the United States. More than 40 days after the first vaccine was approved for emergency use by the Food and Drug Administration, just over 6.0 percent of our population has been vaccinated. And that is with just the first shot, very few having gotten the two shots needed to hit the targeted levels of immunity. Thankfully the pace of the vaccination program is picking up, both as kinks are worked out and we now have an administration that car...

The New York Times Has Not Heard About China’s Vaccines (or Russia or India’s)

It is more than a bit bizarre that the New York Times can run a major piece about the lack of access of developing countries to Covid vaccines and never once mention the vaccines developed by China, Russia, or India. The piece is very useful in highlighting the fact that the United States and Europe have secured the vast majority of the 2021 production of the vaccines developed by western drug companies, leaving relatively few doses for the developing world. As a result, developing countries may...

More Mind Reading at the Washington Post

I wonder if the Washington Post lists mind reading abilities as requirement for its economic reporters. They so often feel the need to do it.

The latest is a piece about the response of Republicans in Congress to President Biden’s proposed rescue package. At one point the piece tells us:

“But when Biden’s relief plan rang in at nearly $2 trillion this month, and included liberal priorities like an increase in the federal minimum wage to $15 an hour, some Republicans saw it as a sign that Biden w...