Dean Baker's Blog, page 219

WSJ Goes Long on the Hard to Get Good Help Story

The usually astute Greg Ip gets derailed in a high production values piece that tries to tell us that our problems stem from not having enough kids. Those left scratching their heads while sitting in traffic jams or standing in over-crowded subway cars, the basic story is that we somehow don't have enough workers to do all the work. (Where are those damn robots when we need them?)

Anyhow, the piece starts out quickly on the wrong foot:

"Ever since the global financial crisis, economists have...

Consumers Are Not Cautious: # 32,457

There is an ongoing myth about the downturn and the weak recovery that consumers unwillingness to spend has been a major factor holding back the recovery. An article in the Washington Post business section headlined, "heading into the holidays the retail industry faces a cautious consumer," draws on this myth. The reality is that consumers have not been especially reluctant to spend in the downturn or the recovery as can be easily seen in this graph showing consumption as a share of GDP.

As...

Thoughts on NPR's Discussion of the Weimar 70s: Deflating Inflation Myths

NPR had a piece on the horrible inflation of the 1970s and how the country was rescued by the herioics of Paul Volcker who was Fed chair at the time. The piece raises several points that could use a bit more context and leaves out some important information.

First and most importantly, the piece implies a world that did not exist. It begins with a discussion of a speech by President Gerald Ford in 1974. It told listeners:

"Inflation was the silent thief, and every year it got worse. Inflation...

Holiday Season Is Time for Compassion for Billionaires: The Case of Jeff Bezos and Amazon

By Dean Baker and Evan Butcher

We all know how hard it is to get by in today’s competitive economy. That’s why billionaires need special help. The Wall Street folks got their multi-trillion bailout in the form of below market interest rate loans when their greed and incompetence would otherwise have put them into bankruptcy. The drug companies get longer and stronger patent monopolies both here, and with trade deals like the Trans-Pacific Partnership, around the world. And, Jeff Bezos and Ama...

Foreign Aid: $30 Billion May Not Be What You Think It Is

Adam Davidson has an interesting piece in the NYT Magazine on the effectiveness, or lack thereof, of U.S. foreign aid. He discusses various models of aid, noting that none of them has been a clear success. 

In commenting on the issue, the article says in passing that the United States spends $30 billlion a year to help the world's poor. This figure could be misleading. Most readers are probably unaware of the size of the overall budget, therefore they may think that $30 billion involves...

Ending Loser Liberalism: Why a Market Based Approach Makes Sense

I’ve been asked why I focus so much on restructuring the market as a way to address problems of inequality and poverty as opposed to tax and transfer programs. There are ideological, economic, and political reasons for this focus, which I will take in order.

On the ideological side, there is a commonly held view that the winners in the economy got there through a combination of luck, skill, and hard work. The losers scored less well in these categories. The central question from the standpoin...

News for Ruth Marcus: Third Way Policies Gave Us the Great Recession

In today's Washington Post, columnist Ruth Marcus contrasted the policies that Bernie Sanders advocates, which she characterizes as being about redistribution, with the policies advocated by the Wall Street funded policy group Third Way, which she describes as being about "expanding opportunity for participation." While it is true that Third Way would like its policies to be described as being about expanding opportunity, it does not follow that this is true.

Third Way has promoted the macroe...

NYT Wrongly Describes Protectionist TPP as "Free Trade"

In policy circles, "free trade' is always supposed to be good. Only ignorant Neanderthal types like protectionism. Therefore the NYT was talking up the Trans-Pacific Partnership (TPP) when it presented the pact as being part of a "free trade" tradition:

"Surrounding himself with cabinet secretaries and generals who had served presidents of both parties, Mr. Obama presented what has long been the establishment Washington consensus in favor of free trade against the surging tide of populist out...

Longevity and the Rising Costs of Social Security

Josh Barro had a good discussion of the impact of longer life expectancy on the finances of Social Security. The basic point is the program will cost more money. There are a couple of points that are worth a bit more discussion and one mistake that should be corrected.

Starting with the mistake, Barro ends his piece by saying that the last major overhaul to Social Security was carried through by a bipartisan commission in 1985. Actually, the recommendations of the Greenspan commission were ap...

Robert Samuelson and the Non Problem with Fannie Mae and Freddie Mac

Robert Samuelson devoted his column this morning to discussing the fate of Fannie Mae and Freddie Mac (F&F). He notes that both are still effectively owned by the government even though almost everyone agreed years ago that they should be wound down and eliminated.

The complaint against leaving F&F public is that it leaves the government exposed to the sort of liabilities that led us to spend more than $180 billion bailing out F&F in 2008–2009. This badly misunderstands the dynami...