Dean Baker's Blog, page 214

The Washington Post, Which Told Us No One Saw the Housing Bubble, Says "Everyone" Is Surprised by Weak Economic Growth

The Washington Post gained notoriety in the last decade by relying on David Lereah as its main source the housing market. Lereah was the chief economist for the National Association of Realtors and author of Why the Real Estate Boom Will Not Bust and How You Can Profit from It. It continues to follow the pattern of relying on a narrow group of economists, most of whom seem to specialize in repeating what the others are saying.

It devoted a major news article to explaining why "$2 gasoline isn...

If Patent Monopolies Bias Cancer Research, Why Not Have Publicly Funded Trials?

Austin Frakt has an interesting discussion in the NYT of patterns in clinical testing of cancer drugs suggesting a bias towards testing drugs treating late-stage patients with little chance of survival as opposed to more promising drugs treating people at early stages or even prevention. However the remedies involve a less demanding testing process by the Food and Drug Administration and increased use of marketing exclusivity to provide more incentive to testing.

Incredibly, there is no discu...

Hold the Celebration on Record Low Unemployment Insurance Claims

The NYT headlined an article on the drop in unemployment insurance claims, "Jobless claims near 42-year low as labor market tightens." While it would be good news if fewer people were filing for unemployment insurance because they were not losing their jobs, this is only part of the story behind the drop in claims. Due to tighter restrictions on unemployment insurance, a much smaller share of the unemployed are eligible for benefits than in prior decades.

For example, in the most recent month...

The Effort to Divert Class War Into Generational War: Lessons On Economics You Won’t Get from Jeff Bezos

Catherine Rampell devoted her column today to a popular Washington past-time: trying to get young people angry at their parents and grandparents so that they are not bothered by the enormous upward redistribution of income taking place in this country.

She begins the piece by telling readers that college students are wasting their time complaining about diversity issues and sensitivity to racism and sexism, then gets to the meat of the story:

“Older generations have racked up trillions in deb...

Paul Krugman and the Young Invincibles

I am going to do a bit of nitpicking on a Paul Krugman post on the Affordable Care Act (ACA). Krugman notes the continued progress of the ACA in reducing the number of uninsured and keeping costs down. Krugman basic points are right, the ACA is working and its opponents are determined to ignore its success.

The basis of the nitpick is that among the positive items, Krugman tells us that "the pool is getting younger." The problem with this comment is that the age of the enrollees really does n...

Did the Great Recession Lead to the Great Vacation?

By Cherrie Bucknor and Dean Baker

Those of us unhappy with the Fed rate hike this month frequently point to the sharp drop in employment rates (EPOP) compared with the pre-recession level. The overall employment rate (the percentage of the adult population with jobs) is still down by more than 3.0 percentage points from pre-recession peaks. Even if the unemployment rate is not far above the pre-recession level, there remains a very large gap in the percent of the population that is working. T...

An Aging Society Is No Problem When Wages Rise

Eduardo Porter discusses the question of whether retirees will have sufficient income in twenty or thirty years. He points out that if no additional revenue is raised, Social Security will not be able to pay full scheduled benefits after 2034.

While this is true, it is important to note that this would have also been true in the 1940, 1950s, 1960s, and 1970s. If projections were made for Social Security that assumed no increase in the payroll tax in the future, there would have been a severe...

The Big Short, the Housing Bubble and the Financial Crisis

I have yet to see the Big Short, but folks I know who have seen it say it's a great movie. But apart from its dramatic qualities, we have to once again raise the question of whether the story of the downturn is really a story of a financial crisis or a burst housing bubble.

I see that the generally astute Neil Irwin weighs in on the side of the financial crisis in his review of the movie.

"A lot of people thought a decade ago that there might be a housing bubble. Few of them understood the c...

Hillary Clinton Embraces Bubble Driven Growth Model

This is what the NYT told readers in an article that reported Secretary Clinton wants to embrace her husband's economic record as president. While the last four years of the Clinton presidency did have low unemployment and rising real wages for workers at the middle and bottom of the income distribution, these gains were driven by the demand generated by the stock bubble.

The bubble led to a surge of investment in high tech, as start-ups were using the money they could raise from issuing stoc...

Southern Europe Did Not Have Heavy Spending on Its Welfare State

A NYT article on the uncertain politics in Spain following an election which left no obvious path to a majority government noted that the outcome was in large part a revolt against the austerity imposed on the country. There have been similar revolts in Greece and Portugal. The piece points out the popular discontent and tells readers:

"As the result in Greece showed, even anti-austerity parties have to answer to financial markets and balance national budgets, and the numbers are still deepl...