Dean Baker's Blog, page 223

The Wall Street Journal and Blackrock Have Not Heard of Social Security

Hey, who can blame them? It's an obscure government program with 60 million beneficiaries, with benefits that are so small that they don't matter to anyone who is anyone.

I'm actually not joking here. The WSJ ran an article telling readers that the average baby boomer between the ages of 55-64 faces a gap of $36,371 between the $45,000 a year they expect to need as income in retirement and the $9,129 they can expect to get based on the savings they have accumulated. The incredible part of the...

Employment in Japan Has Surged Under Abenomics

The NYT had a largely negative assessment of Abenomics, implying that it had done little to improve the state of Japan's economy in the last two and a half years. The piece never mentions the surge in employment in Japan over this period. The overall employment rate for workers age 16-64 rose by 2.4 percentage points since the fourth quarter of 2012. This compares to a rise of 1.2 percentage points in the United States in a period in which the pace of job growth has been widely touted. If the...

NYT Runs G.E. Press Release as News Story

I realize that this may come as a shock to the reporters and editors at the NYT, but companies are sometimes not truthful. That is why when G.E. announced that it was closing a factory in Wisconsin because it no longer had access to subsidized loans through the Export-Import Bank, the article should have said something to the effect of "G.E. claims to be closing factory because of lack of access to Export-Import Bank loans." A serious newspaper would not take the assertion at face value and h...

When the Washington Post Calls the Chained CPI "More Accurate," They Mean They Like It

A Washington Post editorial arguing for the adoption of a budget proposal put forward by Representative Scott Rigell applauded the plan's call for using the chained CPI for indexing all taxes and benefits, including Social Security. It described the chained CPI as "more accurate."

The chained CPI will typically show a lower rate of inflation than the CPI currently used since it accounts for substitutions in consumption, as people change their consumption patterns in response to changes in pri...

Did Ben Bernanke Explain What Would Prevent the Government from Spending Money if the Banks Had Collapsed in 2008?

In his review of former Fed Chair Ben Bernanke's new book, Michael Kinsley tells us:

"Bernanke makes a compelling case that in 2007 and 2008, the world economy came very close to collapse, and only novel efforts by the Fed (cooperating with other United States and foreign government agencies) saved us from an economic catastrophe greater than the Great Depression."

The Great Depression lasted for more than a decade because the government did not spend enough money to get the economy back to a...

Robert Rubin and Federal Reserve Board Independence

In a NYT review of Roger Lowenstein's book on the Federal Reserve Board, Robert Rubin touts the virtues of the Fed's independence from political control. He decries efforts to make the Fed more accountable to Congress.

While the Fed may not feel as though it must directly respond to Congress, that does not mean it is not responsive to political pressures. In the last thirty five years, it has maintained policies that have on average kept the unemployment rate almost a full percentage point ab...

Thomas Friedman Says It's All So Complicated

Yes folks, back in the good old days we just had the Soviet Union and the U.S.:

"I was born into the Cold War era. It was a dangerous time with two nuclear-armed superpowers each holding a gun to the other’s head, and the doctrine of “mutually assured destruction” kept both in check. But we now know that the dictators that both America and Russia propped up in the Middle East and Africa suppressed volcanic sectarian conflicts."

But now we have ISIS and Al Qaeda and so many other small radic...

Paul Ryan Wants to Shut Down the Government, Permanently

Everyone has seen the news stories about how Representative Paul Ryan, the leading candidate to be the next Speaker of the House, is a budget wonk. That should make everyone feel good, since we would all like to think a person in this position understands the ins and outs of the federal budget. But instead of telling us about how much Ryan knows about the budget (an issue on which reporters actually don't have insight), how about telling us what Ryan says about the budget?

It is possible to s...

The TPP and Nonsense on Trade

The early signals from the Obama administration are that the nonsense will be flowing fast and thick in its effort to push the Trans-Pacific Partnership (TPP). We got an indication of the level of the nonsense factor in a CNN article reporting on the administration's efforts to promote the still secret agreement.

CNN cites a column that President Obama had in a New Hampshire newspaper that told readers:

"trade is a substantial driver of New Hampshire's economy. Over 20,000 American jobs are c...

Manufacturing is So Uncool Now, Serious People Don't Even Talk About It

That seems to be the case these days. Last week the Federal Reserve Board reported that manufacturing output fell by 0.1 percent, the second consecutive monthly decline. The sector has been virtually flat since April, presumably reflecting the rise in the trade deficit.

This report seemed to go virtually unnoticed in places like the NYT and the Washington Post. Since the sector is still an important part of the economy, it might have been worth at least a small story.