Dean Baker's Blog, page 185

Thomas Friedman Gives Hillary Clinton Economic Advice, Gets Confused

Many folks remember Thomas Friedman as the person who argued that Germany would insist that Greeks work less as a condition of getting new loans. They may also remember him as the person who doesn't know that in a free market, when an item is in short supply, the price is supposed to rise. This is why he can continually complains about shortages of skilled labor even though the pay of skilled workers is not rising.

Economics may not be Friedman's strong suit, but he is back at it again today...

Core Inflation Edges Lower in June

I probably shouldn't make too much of a deal about the edging lower part, after all, we're just talking a few hundredths of a percentage point, but the real issue is that the inflation rate is not edging higher. The Fed has a target of a 2.0 percent average inflation rate for the core personal consumption expenditure deflator. This measure on inflation rate has been well below 2.0 percent ever since the recession began. There had been some evidence that it was rising as the unemployment rate...

Higher Interest Rates, not Entitlement Spending, Is Cause of Projected Rise in Budget Deficit

A NYT article on the prospects for the federal budget deficit under the next president told readers:

"Even without new spending, the federal budget deficit is expected to rise. By 2020, the Congressional Budget Office estimates, the deficit will hit nearly $800 billion, or about 3.7 percent of expected economic output, as increasing entitlement costs for retiring baby boomers take their toll on federal coffers."

Actually, the main reason the deficit is projected to rise is the Congressional...

Robert Samuelson and the Second Great Depression Crap

Hey folks, I saved you all from a Martian invasion, you really should be thankful. And Robert Samuelson says we were saved from a second Great Depression by the actions of the Federal Reserve Board. Yes, both claims are lies, but Samuelson's lie is more transparent than my lie.

The point here is a simple one, we know how to get out a depression. It's called "spending money." We got out of the last Great Depression by spending lots of money on fighting World War II. Buy guess what, the econom...

Quick Note On Seattle Minimum Wage Study

Max Ehrenfreund had an interesting piece reporting on a new analysis of the first round of wage increases from Seattle's $15 an hour minimum wage law. The higher wage is being phased in between 2015 and 2020. The study found modest average wage gains of 73 cents an hour for low wage workers. The effect was limited in part because the strong economy helped to boost wages, so the minimum wage had less effect than otherwise might have been expected.

But the piece also notes the finding that aver...

NYT Does Impassioned Pitch for TPP in Its News Section

The NYT gave an analysis of changing attitudes towards trade agreements that completely misrepresented the key issues at stake. The headline pretty much said it all, "both parties used to back free trade. Now they bash it."

In fact, the current round of deals being negotiated, most importantly the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Pact (TTIP) have little to do with a conventional free trade agenda of lowering tariff barriers and eliminating quotas. With f...

Greg Mankiw Argues that Protectionism Is Likely to Become Increasingly Dominant As More People Take His Economics Classes

The elite types have noticed that the masses are not happy about the economic agenda that they have crafted. Since the elites can’t imagine that the problem has anything to with the fact that their agenda is designed to redistribute income from the masses to the elites, they turn to psychological explanations.

In this vein, Greg Mankiw, a Harvard professor and former chief economist to George W. Bush, used his NYT column to discuss voters’ attitudes toward trade agreements like NAFTA and the...

Thomas Friedman Says the People He Disagrees With Are Like Donald Trump

Thomas Friedman moves beyond his Flat World to divide the world into "Web People," who he likes, and "Wall People" who he holds in contempt. Donald Trump is naturally the lodestar of the Wall People, but the category goes well beyond the people who want to put up a huge wall on the border with Mexico.

Someone with nothing to do with their lives could perhaps try to find some coherence in Friedman's definitions, but the most obvious definition of Wall People is people who don't share his visio...

The Return of the Housing Bubble???????

Okay, it's not like the good old days of 2002–2007, but there are some grounds for concern in certain markets. In particular, the Case-Shiller tiered price indexes are showing extraordinary increases in the bottom tier (lowest third of house sale prices) in several markets.

For example, the index shows that in Denver prices in the bottom tier have risen by 16.7 percent over the last year and by 49.8 percent over the last three years. The comparable figures for the top tier are 6.4 percent and...

Andrew Ross Sorkin Doesn't Like Glass-Steagall, So Is He Making Things Up to Push His Case?

That's the question millions are asking after reading his column noting that both the Democratic and Republican platforms call for re-instating Glass-Steagall. (It is important to note that the Democrats refer to the 21st Century Glass-Steagall Act introduced by Senator Elizabeth Warren. This measure would also address some of the problems created by the shadow banking system by changing rules on repayment in bankruptcy. This would put a check on the ability of troubled institutions to have a...