Dean Baker's Blog, page 235

Steve Rattner Is Right: Baby Boomers Failed Millennials

Steve Rattner is right that the baby boom generation failed millennials, but he has the reason wrong. He argues that we failed the millennials because they may have to pay higher taxes to support our and their Social Security and Medicare.

It's hard to see the story here. We baby boomers have to pay much more in Social Security and Medicare taxes than did our parents and grandparents. Did they do us some horrible injustice? We do enjoy higher living standards and longer life spans, so what's...

Second Quarter Employment Cost Index Should Make September Rate Hike Less Likely

The Labor Department reported that the Employment Cost Index rose by just 0.2 percent in the second quarter. This brings the growth in the index over the last year to 2.0 percent. This undermines any claim that wage growth is accelerating.

With inflation still well under the Fed's target of 2.0 percent as an average rate of inflation (not a ceiling), and wage growth remaining flat or possibly even falling, the Fed would have little basis for raising interest rates to slow the economy. With th...

David Brooks Is Confused, Thinks God Created Patents

And the Fed and corporate governance structures. That is the implication of his column where he describes the debate over inequality as a debate "between people who think you need strong government to defeat oligarchy and those who think you need open competition."

Actually, his side in this debate thinks you need a strong government to enforce patent and copyright monopolies, jailing any potential competitors. It believes you need a strong government, in the form of a central bank, to slow...

Dylan Matthews Is Upset that Bernie Sanders Thinks that U.S. Citizens Should Live Better Than Chadians

I'm not kidding, this is what he criticized Senator Bernie Sanders for in a Vox piece today. He apparently views it as outrageous that Sanders, a candidate for the Democratic presidential nomination, doesn't think that the United States should open its borders so that every person who in the world who wants to come and work in the United States has the opportunity to do so.

On the one hand Matthews has a point, there is an injustice in that people who were born in the United States are able t...

Wealth Gap by Age: A Big Thing Not to Worry About

In a Wonkblog post, Ana Swanson complained that people are not sufficiently worried about the wealth gap by age. This should rate high on the list of items for people not to worry about. The basic reason is simple, for most people wealth is not a very good measure of their well-being and furthermore, the meaning of "wealth" has changed substantially over time.

If that sounds strange, let me make it simpler. If we go back thirty years, most middle income retirees could count on getting a subst...

The Bubble Boys: Jeb Bush and Bill Clinton

Paul Krugman rightly mocks Jeb Bush for taking credit for the strong growth in Florida during his tenure as governor. As Krugman points out, the reason for the strong growth was that Florida had one of the worst housing bubbles in the country. Its collapse gave Florida one of the worst downturns in the country. (I had made the same point a couple weeks earlier to a reporter fact-checking Bush's claim on growth.) The weak banking regulation that facilitated the bubble is not the sort of thing...

The Washington Post Wants to Cut Disability Benefits

Actually, after running many near hysterical pieces on the horrors of the Social Security disability program, yesterday's editorial was reasonably moderate. Nonetheless, it concludes by telling readers:

"Though hardly the sole, or leading, cause of declining labor-force participation in the United States, SSDI is nevertheless a factor. Reforming it could raise the economy’s potential growth, as well as millions of people’s life prospects. The pending crisis creates an opportunity for bipartis...

Holy Wage Stagnation Batman, Income Shares Are Not Changing!

Clive Crooks apparently thought he stumbled on some new revelation when he read a piece by Robert Lawrence at the Peterson Institute for International Economics. Lawrence showed that we look at the pattern in average wages, and use a net measure of productivity (rather than gross), and a common deflator for adjusted wages and output, real wages kept pace with productivity growth, at least until the Great Recession.

I suppose Lawrence deserves some sort of congratulations, it took him less tha...

Does Foreign Investment Make the U.S. Economy More Vulnerable?

Apparently the NYT believes it does. A lengthy article on the growth of Chinese foreign investment told readers:

"But the show of financial strength [foreign investment by China] also makes China — and the world — more vulnerable. Long an engine of global growth, China is taking on new risks by exposing itself to shaky political regimes, volatile emerging markets and other economic forces beyond its control.

"Any major problems could weigh on China’s growth, particularly at a time when it is al...

Are People Less Willing to Pay for Education Because of Medicare and Medicaid?

That's the assertion at the end of Robert Samuelson's piece on the 50th anniversary of the creation of Medicare and Medicaid. Samuelson tells readers:

"By 2030, the number of Medicare beneficiaries is projected to reach 81 million, an almost 50 percent increase from today. Meanwhile, higher health spending has squeezed other programs. That’s an ironic footnote for the triumph of ’65: By threatening the rest of government, the instruments of a liberal agenda — Medicare and Medicaid —...