Dean Baker's Blog, page 243

Retail Sales Up In May: Stingy Consumers Respond to WSJ

Economic reporting is far too focused on short-term fluctuations that often have little relationship to the underlying trend growth in the economy. Last fall this focus led to many celebrations of a turn around in the economy with many pronouncements that the United States was back on top in terms of growth.

The celebrations quickly turned to despair as bad winter weather led to a drop in GDP in the first quarter. There was much hand-wringing over why consumers were not spending their dividen...

George Will Argues for TPP Because After a Decade We Can Regain Half of the GDP Lost in the First Quarter

Yes folks, it's desperation time for the supporters of the Trans-Pacific Partnership (TPP). To get this sucker through they will say anything, because hey, making stuff up for the cause always sells in official Washington.

In his Washington Post column George Will argued for the TPP because we need it to increase growth. He pointed to the 0.7 percent drop in GDP in the first quarter as illustrating the problem. (This decline was of course mostly due to the weather, but whatever.) If we view t...

Thomas Friedman Can't Understand a Shortage of Demand

The man who said he endorses any trade deal that has the words "free trade," and said that the Germans would insist Greeks work shorter hours as a condition of a bailout is talking about economics again.

Citing a McKinsey study, Friedman tells readers:

"Millions of people can’t find work, 'yet sectors from technology to health care cannot find people to fill open positions. Many who do work feel overqualified or underutilized.'"

The situation where workers can't find work or take jobs for whi...

The No Context Gang Wins Another Battle at NYT

The NYT told readers that the budget deficit in the first nine months of the 2015 fiscal year was $365.2 billion and is projected to be $486 billion for the whole year. Feel informed?

Odds are that most readers don't have much basis for determining whether this deficit is big or small (yes, it is lots of money). In times past the NYT had committed itself to putting numbers like this in some context that would make it understandable to readers. For fans of such context, the deficit is a bit le...

Wow, Just as China Begins to Suffer a Labor Shortage Because of One Child Policy the Robots Are Coming to Steal all the Jobs

There have been numerous articles and columns about how China is going to suffer because of its one child policy. The story is that there will be very few workers to support the growing population of retirees.

Well, just when you thought it couldn't get any worse, it turns out that robots are coming to take the jobs of the few workers China still has. How are they ever going to be able to support their retirees now?

Yes, these are completely opposite stories. It's too hot and too cold. It's t...

The Latest on TPP: The Folks Who Want to Cut Medicare Want Medicare to Spend More

No one expects much consistency from Washington politicians or the Washington Post, but the latest episode in the Trans-Pacific Partnership (TPP) should be over the top even for this crew. Wikileaks published the text of a leaked health care annex. The annex spells out a set of rules that public health care programs must follow in deciding which drugs and procedures to cover. This will be subject to review and in principle can be contested through the investor state dispute settlement (ISDS)...

Court Says Unions Can't Force State to Properly Fund Pensions

There is a widely circulated story in policy circles that public sector unions are to blame for underfunded public pensions. The story is that the unions effectively make deals with politicians they support to get generous pensions and leave the funding for people to deal with in the future.

In fact, there is little evidence to support this story, as many states with weak or no public sector unions rank near the bottom in pension funding, while some states with strong unions, like New York an...

The Cost of Forgiving Student Debt and the Laffer Curve

Several news articles have reported on the potential costs of the Obama administration's plans to forgive some of the student debt associated with Corinthian Colleges. Corinthian is a for-profit college that recently went bankrupt. It has been accused of using fraudulent tactics to get students to take out large loans to pay for its tuition.

In projecting the costs to the government, these pieces neglect to take account of the positive effect on incentives that eliminating this debt would hav...

WSJ Joins the TPP Stumble

The Wall Street Journal promised "trade deficit myths" in its editorial on the Trans-Pacific Partnership (TPP), and it certainly delivered. It begins by telling readers:

"The first problem with Ms. DeLauro’s charge is that running a trade deficit—that is, having more imports than exports—isn’t necessarily bad. In the U.S. it can signal economic health: that American consumers and businesses are saving money by buying cheaper foreign goods, and that the U.S. economy is attracting overseas inve...

Edward Prescott Says Germany Has a Higher Per Capita Income Than the United States

That would appear to be the implication of his comment in a WSJ column that:

"Further, a recent study has shown that Germans and Americans spend the same amount of time working, but the proportion of taxable market time vs. nontaxable home work time is different. In other words, Germans work just as much, but more of their work is not captured in the taxable market."

According to the OECD, the average work year for a German worker is just 77.6 percent as long as for a U.S. worker (1388 hours...