Dean Baker's Blog, page 190

Robert Samuelson Doesn't Think that Wives Should Get Paid for Their Work

That's only a small exaggeration. He by Steve Rose showing substantial income gains for upper middle class households over the last four decades. The study did not take account of the extent to which incomes rose because households had two earners, as opposed to a situation where people in the household got more pay for each hour worked.

Most people probably expect that a household would have more income if two people are working than one. Economic progress is when people get m...

New York Times Tells Readers that the Bank of International Settlements Is Still Complaining About Low Interest Rates

Back in 2011 the Bank of International Settlements (BIS) began warning of the risks of run away inflation associated with the expansionary monetary policy being pursued by the Fed, the European Central Bank and other central banks. It is still making these warnings. Unfortunately, the NYT presented the warnings as being somehow new information that should interest them, rather than old predictions that had been proven wrong repeatedly.

Even better, the piece tells us that one of the main cre...

Associated Press Complains About Politicians Lack of Action on Global Warming

Just kidding, AP wouldn't waste readers time on anything so frivolous as the future of the planet. No, it's calling politicians irresponsible because they won't run out and cut Social Security and Medicare.

The piece is headlined,"Medicare, Social Security finance woes." The first sentence tells readers:

"The nation's framework for economic security and health care in retirement is financially unsustainable, but you wouldn't know it from listening to the presidential candidates."

Yep, the pr...

NYT Strongly Disagrees with the I.M.F. on the State of Iceland's Economy

An NYT article on the upcoming elections in Iceland told readers that, "gross national income per capita is down by a quarter since 2007." The I.M.F. doesn't agree. According to the I.M.F. data, per capital GDP in Iceland is around 2.0 percent higher now than its pre-recession peak. That is a very different story.

In fairness, the NYT piece refers to gross national income (GNI), not gross domestic product. Generally these are very close, but in a small country like Iceland they may differ by...

Quick Thought on Globalization as We Know It

Jim Tankersley had an interesting piece arguing that the Brexit vote ended "globalization as we know it." I am less optimistic on that front. The folks who profit from the current path of globalization are incredibly powerful and very effective at working around democracy and things like that. But that aside, the article had an interesting graph that caught my attention. 

The graph shows the ratio of international trade in goods and services to GDP over the last two decades. After rising...

Serious Confusion at WaPo on Brexit Consequences and Austerity

The Washington Post once again got in over its head as it tried to sort out the consequences of the UK's exit from the EU. In article on the implications for the rest of the European Union it told readers:

"A strain of fear is already running through the German government as it contemplates the loss of Britain — whose conservative prime minister, David Cameron, largely backed Chancellor Angela Merkel’s austerity crusade. Berlin now fears a “ganging up” by nations including France, Spain and I...

Bursting Bubbles and the Fallout from Brexit

Neil Irwin had an Upshot piece trying to work through some of the fallout from the vote to leave the European Union. It is worth elaborating on a couple of the points in this piece.

First, Irwin seems to give financial markets undue credit in having a clue. He argues that the effects of the vote will be transmitted to the economy through financial markets. While this is largely true, financial markets are notoriously fickle. They often over-respond to events or even non-events, the most obvio...

Washington Post Gets Hysterical on Brexit

"Britain's exit from E.U. sends global economy into a tailspin." That was the headline of a Washington Post article on the vote in the U.K.. If you missed the tailspinning economies that's because this is just Washington Post hysteria. Obviously the Washington Post is referring to financial markets. They apparently don't realize the difference between financial markets and the real economy.

And if you don't realize they are very different then you must believe in the horrible recession of 198...

Universal Basic Income, Job Killing Robots, and the Washington Post

Back in my teaching days I would use the seriously wrong answers on student exams as valuable information telling me what concepts I need to explain better. Charles Lane's Washington Post column on a universal basic income can be used the same way. Lane clearly does not like the idea of a universal basic income (UBI), but his confused rationale ties together many common misunderstandings.

First, the whole idea of job-killing robots is more than a bit bizarre for a couple of reasons. Robots ki...

The Trump Economic Disaster

Neil Irwin has an Upshot piece reporting on a study by Mark Zandi projecting that the Donald Trump agenda would be an economic disaster. The piece is a fair assessment (he sees Zandi's projections as plausible, but certainly highly debatable), but it is worth making a couple of additional points.

First, much of the Zandi horror story is premised on the idea that the economy is at full employment and that any further stimulus from larger budget deficits would lead to higher interest rates and/...