Dean Baker's Blog, page 247

Third Way Misses the Boat Big Time on Game Rigging

In a Washington Post column today, Delaware Governor Jack Markell and Third Way President Jonathan Cowan took a swipe at the progressive wing of the Democratic Party in arguing for a set of ill-defined centrist proposals. (For example, they want better schools -- great idea.) There is much about their piece that is wrong or misleading (they imply that the rebuilding of Europe and Japan impedes growth and makes us poorer, that's not what standard trade theory says), but the best part is in the...

Niall Ferguson Goes to Bat for Cameron, Osborne, and Austerity

I see that Niall Ferguson is again pushing the case that the austerity pursued by the Cameron government in 2010 was both necessary and good. This can be a useful opportunity to show why the history since the Conservatives took power does not support this claim, even though they managed to get re-elected.

To quickly summarize Ferguson’s case, he argues that the turn to austerity was a matter of necessity, not choice. The U.K. had a high and rising debt burden. Furthermore, inflation was incre...

The Welfare Queens That Run Our Universities

Frank Bruni has a very good column on the pay packages of presidents at universities around the country. Bruni points out that many make well over a million dollars a year and some of them make several million a year, when their pension is included.

One aspect to this issue that Bruni neglects to mention is that these pay packages come largely at the public's expense. In the case of public universities, the school are largely financed with public funds, so the taxpayer involvement is quite di...

The TPP and the Incredible Hulk Theory of International Relations

Washington Post columnist Ruth Marcus is unhappy with Senator Elizabeth Warren's opposition to the trade agreement. In particular Marcus is upset that Senator Warren has complained that the deal is secret, calling this a bogus argument. I won't go through the whole piece (this stuff has been addressed many places), but I do want to deal with one point Marcus raises.

She noted that Warren pointed out that President Bush had made the draft text of the Free Trade Area of the Americas agreement p...

How Generous Are Those Illinois Pensions?

Mr. Arithmetic was wondering after seeing an article in the Chicago Sun Times that analyzed the distribution of pensions among former employees of the City of Chicago and the State of Illinois. The article began by telling readers:

"One of every four retired workers from the state of Illinois, the city of Chicago and the Chicago Public Schools is getting a pension of more than $60,000 a year.

"That’s 80,365 people in all."

It then went on to say that 13,240 of these workers had pensions of mo...

Lesson for Bill Daley, TPP Promoter, the United States is a Big Country

There is much that is wrong with former Clinton and Obama aide (and J.P. Morgan executive) Bill Daley's NYT column arguing for the Trans-Pacific Partnership (TPP). First, there is the obvious that he is equating the TPP and past trade deals with "free trade."

Of course they are not the same, these deals have been about putting manufacturing workers in competition with low-paid workers in the developing world, while protecting doctors and other highly paid professionals from the same sort of c...

Manufacturing Employment and the Trade Deficit

Paul Krugman addressed the question of whether the decline in manufacturing employment can be attributed to the trade deficit. He rightly points out that most of the decline is due to productivity growth, but notes the trade deficit has been a contributing factor. It is worth adding a bit more to the discussion.

The manufacturing share of employment has been declining for more than half a century. The story is that productivity growth is generally faster in manufacturing than the rest of the...

Imports Displace Domestic Jobs: Why Do Proponents of Trade Agreements Have So Much Trouble Acknowledging This Fact?

Suppose Ford closes an assembly plant in Ohio and instead has its cars assembled in Mexico and shipped back to the United States. The workers in the Ohio factory have lost their jobs because of imports. This is a very simple point. For some reason supporters of trade deals like the Trans-Pacific Partnership (TPP) have trouble acknowledging this basic fact.

The difficulty that TPP proponents have acknowledging the jobs lost due to imports is bizarre, because the job loss does not mean that the...

Robert Samuelson Finds Currency Values Far More Complicated Than They Are

As a general rule, when someone tries to tell you an economic issue is more complicated than it seems, they are trying to mislead you. This doesn't mean there are not occasionally some complex issues in economics, but these are much rarer than the experts want you to believe. After all, who would pay economists salaries well into the six figures if their work was as simple as washing dishes?

This should be kept in mind by anyone reading Robert Samuelson's column telling readers not to worry a...

Media Overlook Weak Manufacturing Numbers, Consistent with Rising Trade Deficit

For some reason major news outlets like the NYT and WaPo chose not to report on the Federal Reserve Board's release of data on industrial output for April. This release showed that manufacturing output was flat in April leaving output roughly half a percentage point below the November level. Meanwhile capacity utilization, which is often a forerunner of investment in new plant and equipment, dropped to 77.2 percent, 0.9 percentage points below its November level.

The weakness is manufacturing...