Dean Baker's Blog, page 181

Fareed Zakaria Is Confused on Trade and the TPP

In pushing trade agreements it is fair to say anything, even if it has no relationship to the truth. Therefore it is not surprising to see Fareed Zakaria (TPP) by claiming that it will boost growth and attacking Bernie Sanders for opposing "trade policies that have lifted hundreds of millions of the world’s poorest people out of poverty."

First, the impact on growth will be trivial. According to the International Trade Commission's assessment, the TPP wil...

Economists Actually Shouldn't Differ on Assessing Consumption Patterns

The NYT had a piece headlined "economists discuss differences that divide them," which contrasted the views on the economy of Michael Gapen, chief United States economist at Barclays, and Stephanie Pomboy, founder of MacroMavens, an independent economics consulting firm. The first item where they presented contrasting views was on consumption patterns.

While Gapen thinks consumption will be strong the rest of the year and beyond, Pomboy is quoted as saying:

"After the bursting of the housing...

Wall Street Journal Warns that President Obama's Target on Global Warming Could Cost Half as Much as Iraq/Afghan Wars

That is what they warned, but they didn't quite put it to readers that way. Instead the subhead warned that meeting President Obama's goal of reducing emissions by 80 percent by 2050 would cost $5.28 trillion.

Yes folks, that sounds pretty scary. After all, $5.28 trillion over the next 34 years is bigger than a bread box, possibly much bigger. 

Of course, it is unlikely that many of the WSJ's readers have a clear idea of how big the economy will be over this 34-year period, so they ...

St. Louis Bank President Jim Bullard Tells Us Why the Fed Needs to Be Reformed

The Federal Reserve Board has enormous power over the nation’s economy. Its efforts to promote growth through pushing down interest rates in the wake of the Great Recession have almost certainly created more than one million jobs, while saving homeowners hundreds of billions of dollars in mortgage interest. (The Fed has become especially important in the context of a Congress that shows little interest in doing anything to promote growth and jobs.)

But the Fed doesn’t always act to promote gr...

Thomas Friedman Didn't Hear Republicans Want to Kill Obamacare

Thomas Friedman once again urged both major parties to compromise to get things done in his NYT column. He argues that compromise is the only way to get things done. To make his case he lists a number of issues where he argues compromise is necessary, leading with:

"How will we improve Obamacare?"

Friedman probably missed it (hard to get information about Washington politics at The New York Times), but the Republicans have made repeal of the Affordable Care Act (ACA) a sacred cause. They ro...

Most Job Loss in Coal Country Occurred Long Ago

The NYT has a major piece on the skepticism towards Hillary Clinton's job creation proposals in the coal mining regions of Virginia. While there undoubtedly is much ground for skepticism about the prospects for such proposals, it is worth noting that most of the coal mining jobs in this region were lost long ago.

Employment in coal mining in Virginia peaked at just under 25,000 in 1982. By 1992 it was under 14,000 and it was below 10,000 by the end of the decade.

Employment in Mining in Virgi...

World's Greatest Economic Expert, "No One," Appears in Robert Samuelson Column

We all have come to appreciate the economic wisdom of no one. After all, no one saw the housing bubble and no one expected the recovery to be so weak. So when no one talks, people listen.

That's why people were impressed to see no one make an appearance in Robert Samuelson's column. Samuelson notes the weak 1.2 percent economic growth in the first half of 2016, which he says puts us at the edge of a recession. He contrasts this with the relatively healthy job growth which he inaccurately des...

Bernstein and Krugman Worry about the Fed and the Next Recession

I see that my friends Jared Bernstein and Paul Krugman are worried that the Fed may not have enough ammunition to combat the next recession when it comes. I can’t say I share their concern.

First, we have to remember that recessions aren’t something that just happens (like global warming :)). Recessions are caused by one of two things: either the Fed brings them on as a result of raising interest rates to combat inflation or a bubble bursts throwing the economy into a recession.

Taking these...

Interest Payments on the Debt Have Fallen to 0.8 Percent of GDP, So WaPo Wants to Cut Social Security and Medicare

Both parts of the that headline are true, although the Post did not connect them in exactly this way. It's editorial instead highlighted the debt-to-GDP ratio, trying to hide from readers the fact that the real burden of the debt is near a post-World War II low.

This is a classic case of the ends justifying the means. The end here is to cut the Social Security and Medicare benefits of middle income retirees. The Post sees this as the obvious policy option to pursue in a context where there ha...

Profit Share Falling Back Towards Pre-Recession Levels, Not There Yet

The Commerce Department released data on corporate profits along with its preliminary GDP report for the second quarter of 2016. It showed that the profit share of corporate income is continuing to edge downward. The before tax share of corporate profits (net operating surplus) was 24.2 percent in the second quarter of 2016. This is down from a peak of 27.4 percent in the third quarter of 2014, but still well above 20.4 percent average for the four decades prior to the collapse of the housing...