Dean Baker's Blog, page 195

The Poor Pay More: New Goods Benefit the Rich

Max Ehrenfreund had an interesting column reporting on research that showed the prices of goods purchased by higher income households fell more rapidly than the prices of goods purchased by lower income households. The basic argument is that new goods introduced into the market tend to be targeted towards higher end households. These new goods put downward pressure on the prices of the older goods with which they are competing. Since these are goods disproportionately purchased by higher end...

Can the NYT Get Its Columnists to Move to Using Data?

Arthur Brooks, the the president of the American Enterprise Institute, used his NYT column to complain that people in the United States were not moving enough. He argues that people were reluctant to move from depressed areas of the country to the growing areas which offer more opportunities. Ironically, his examples of prosperous areas and sectors were based on badly outdated information.

Brooks tells readers:

"We might expect movement from a high-unemployment state like Mississippi (unempl...

The Answer to Slow Productivity Growth: Shorter Workdays

Economists have been largely puzzled by the sharp slowdown in productivity growth over the last decade. (Sorry, robot fans, they aren't taking jobs yet.) Anyhow, productivity growth has fallen from nearly 3.0 percent annually from 1995 to 2005, to less than 1.0 percent over the last decade. We've actually seen negative growth over the last two years.

Anyhow, there are no widely accepted explanations for this sharp falloff. (My story is that in a weak labor market with workers desperate to fin...

Washington Post In Over Its Head in Sanders Bashing: Doesn't Understand How to Break Up Big Banks

The Washington Post, which has decided to abandon journalism for the cause of bashing Bernie Sanders, included this bizarre comment in a piece on the failure of the college headed by Jane Sanders, Senator Sanders' wife:

"...many observers wonder whether the septuagenarian socialist even fully understands how the economy works. His inability to explain how he’d break up the big banks during the disastrous sit-down with the New York Daily News editorial board last month remains a good data poi...

The Impact of a Higher Yen on Japan's Trade Balance Is Important;Its Impact on the Inflation Rate Isn't

The NYT is once again confused about the story of deflation, telling readers that it's bad news for Japan that the yen has recently risen in value since a higher yen reduces import prices, increasing the risk of deflation. While a higher valued yen is a problem because it makes Japan's goods and services less competitive internationally, and therefore worsens the trade deficit, its impact on the inflation rate is of little consequence for the economy.

The impact on the trade balance is straig...

Don't Bet the House on Accelerating Inflation

The first paragraph in a Reuters article on the April consumer price index (CPI) told readers:

"U.S. consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose, pointing to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year."

Before the cheering for another Fed rate hike gets too loud it would be worth looking at the data more closely. The core CPI has risen modestly in recent mon...

NYT Seems to Think Productivity Growth Is New

That is the impression that readers may take away from an article discussing the potential for self-driving trucks. The article notes that 3 million people work as truckers and warns of the risk that these people face from displacement due to this technology.

In fact, technology has always displaced workers from jobs. This is the basis for higher wages, as the remaining workers got the benefit of productivity growth in the form of higher wages. Higher wages allowed them to buy more goods and...

Robert Samuelson Is Right on GDP

Robert Samuelson used his column today to argue against included environmental, equity considerations, or other factors in the measure of the gross domestic product. He is completely right.

Over the decades there have been many efforts to change the measure of GDP to include other factors that we should value under the argument that the output of goods and services is not everything. Of course, the output of goods and services is not everything, but the problem is trying to use GDP as a compr...

Just Because French Politicians Say They Are Removing Labor Protections to Reduce Unemployment, that Doesn't Mean They are Removing Labor Protections to Reduce Unemployment

The Washington Post ran a piece on the dispute in France over weakening labor protections for workers. The piece told readers the law removing protections (such as weakening rules on the 35-hour workweek) is:

"an attempt to combat unemployment — an issue all over Europe that is especially acute in France, where the rate has stubbornly lingered over 10 percent for some time now, just below its high in the mid-1990s."

It is far from obvious that weakening protections will be an effective way to...

Washington Post Uses Filler on "Free-Trade" Agreements

Back in the old days reporters and editors tried to eliminate excess words from news articles to make them as short as possible. That's why it is interesting to see the Washington Post go the other way. In an article assessing the presidential race it told readers:

"Clinton performed poorly against Sen. Bernie Sanders of Vermont in Democratic primaries in this part of the country — partly because of her past support for free-trade agreements and partly because Sanders’s promises to focus on e...