Dean Baker's Blog, page 241

Unemployment and Racial Inequality

Michael Fletcher had a short piece highlighting the huge gulf in the economic status of whites and African Americans. While the piece rightly points out that there are no simple remedies to eliminate the gap, one of the charts suggests a policy that can make a huge difference.

The chart shows the overall unemployment rate and the unemployment rate for whites and African Americans. The unemployment rate for African Americans is consistently twice as high as the unemployment rate for whites. Th...

The Protectionists' Chart on the Entitlement Problem

The Wall Street Journal was good enough to give us "our entitlement problem for the next generation in one CBO chart." The featured chart shows the projected discounted cost of Medicare benefits compared with the discounted value of the taxes paid in. It shows that the former is around three times the latter for the baby boom cohorts.

While this may look like the baby boomers are getting a real bonanza on their health care the real story is that the doctors and the drug companies are getting...

The 2001 Recession Actually Was Really Bad News

I see that I have to disagree with Brad DeLong again. Brad wants to see the 2008 downturn as a uniquely bad event due to the overextension of credit and the ensuing financial collapse. I see it as overwhelmingly a story of a burst housing bubble and the resulting fallout in the real sector.

First off, in this piece Brad seems to want to attribute the worldwide downturn to the collapse of the housing bubble in the U.S. This seems more than a bit bizarre, since countries like Spain and Ireland...

Patents and the Distribution of Income

The NYT had a piece on efforts to encourage doctors to assess the price and relative effectiveness of drugs when writing prescriptions for cancer patients. It notes that drug companies charge $10,000-$30,000 a month for many of the new cancer drugs. It then comments on the suggestion that doctors should take these costs into account in deciding treatment:

"Evaluating the latter cost would put doctors in the role of being stewards of societal resources. That is somewhat of a controversial role...

A Successful Grexit Also Scares Euro Zone Leaders

An NYT article on the prospects of a deal between Greece and its creditors left this item off its list of the risks from Greece leaving the euro. If Greece were to leave the euro, its exports, most importantly tourism, would be hyper-competitive. This would likely lead to a huge increase in its business as travelers from Europe and the United States opt to visit Greece rather than other tourist destinations.

This could lead to the same sort of rebound that Iceland saw after its initial collap...

The Market for CEOs: Do Bad Performers Get a Pay Cut?

Robert Samuelson used his column today to note the sharp rise in CEO pay. He ends up leaving it an open question as to whether the increase in the pay gap between CEOs and average workers, from an average of 20 to 1 in the 1960s to 300 to 1 at present, reflects the fundamentals of the market. In assessing this question it is worth considering the incentives for the boards of directors that set CEO pay.

If a CEO wants another $1 million, a director is likely to make herself unpopular among her...

George Will Doesn't Like the Greek Government and Is Confused

Those are the two takeaways for most readers from his column today. Most of the piece is a condemnation of Greece's leftist government for what Will considers its lack of realism and ineptitude. Then he points out:

"Since joining the euro zone in 2001, Greece has borrowed a sum 1.7 times its 2013 GDP. Its 25 percent unemployment (50 percent among young workers) results from a 25 percent shrinkage of GDP. It is a mendicant reduced to hoping to “extend and pretend” forever. But extend...

How About the "Stupid Boss" Theory of Why It Takes So Long to Fill Vacant Jobs

The usually insightful Matt Yglesias takes a big swing and a miss in his effort to explain why it appears that so many vacancies are going unfilled. He notes the rise in vacancies and also the increased period of time that employers are taking to fill vacant positions.

He then asks the obvious question as to why employers don't raise wages if they aren't getting qualified applicants. Remarkably he accepts the argument that there may be no point in offering hiring wages since workers with the...

The Track Record for Austerity in the Euro Crisis Countries

The NYT decided to survey what people in the other crisis countries think about the situation in Greece. The general theme appears to be that we toughed it out, now Greece should too. It would have been useful to include a bit of data on where these countries stand now. Per capita income and employment are all well below their pre-crisis level in all four countries mentioned.

This table compares the I.M.F.'s projections for per capita GDP and employment in 2015 with the 2007 level in each of...

Charles Lane Mind Reading Routine on President Obama and the TPP

In a piece that attacks the AFL-CIO for opposing fast-track trade authority, Washington Post columnist Charles Lane told readers:

"President Obama, elected and reelected with significant majorities of the popular vote, believes that the American people would benefit if he gets authority from Congress to negotiate international trade agreements and then submit them to both houses for approval on an expedited basis."

It's interesting that Lane thinks he knows what President Obama believes. Most...