Dean Baker's Blog, page 269

Japan's Declining Population: More Which Way Is Up Problems at the Post

Yes, Japan looks like it is becoming less crowded and the folks at the Post are terrified. A Wonkblog piece warned readers that, "Japan's birth rate problem is way worse than anyone imagined."

The basic story is it seems that Japan has consistently over-projected its birthrate. As a result, its population is now declining and the rate of decline may be even faster than is now projected.

The question is why is this a problem? First, just to take an issue off the table, it is important that J...

E.J. Dionne and Dynamic Scoring: Getting the Story Backward

E.J. Dionne is upset about Republican plans to have the Congressional Budget Office (CBO) use dynamic scoring in assessing the effects of tax cuts. He tells readers that dynamic scoring:

"will make it easier for the Republicans to shower money on their favored constituencies while pretending to be fiscally responsible. Dynamic scoring, the Center on Budget and Policy Priorities noted, 'could facilitate congressional passage of large rate cuts in tax reform by making the rate cuts appear — on...

The It's Hard to Get Good Help Crowd Bemoans the Fact Europe is Becoming Less Crowded

The horror, the horror! Europe has a declining ratio of workers to retirees, just as has been the case for the last fifty years.

That is the message Arthur Brooks gave us in his NYT column this morning, although he left out the part about the last fifty years.

"Start with age. According to the United States Census Bureau’s International Database, nearly one in five Western Europeans was 65 years old or older in 2014. This is hard enough to endure, given the countries’ early retirement ages an...

Pay by the Mile Auto Insurance: A Testament to the Lack of Creativity of Environmentalists

It is often said that the environmental movement has less creativity than a dead clam. Nothing demonstrates this point better than the lack of interest in promoting pay by the mile auto insurance.

I am reminded of this issue by a piece on Morning Edition that discussed how the recent drop in gas prices will be associated with thousands of more deaths in traffic accidents. The point is simple: people will be driving more and faster, therefore there will be more accidents and more deaths.

This...

Which Way Is Up Problems on the Euro

A NYT article on the recent drop in the value of the euro against the dollar carried the bizarre headline, "falling euro fans fears of a recession." The headline is strange, because the drop in the euro will not cause a recession. In fact, it will help the economy by boosting net exports from the euro zone, as the article itself states.

Several other points in the article are also seriously confused. It asserts:

"There is also the fact that eurozone countries tend to be net importers of oil...

The Growth Projections for the Trans-Atlantic Trade and Investment Pact Are a Joke

Bob Kuttner has a column in the Huffington Post warning of the dangers of the Trans-Atlantic Trade and Investment Pact (TTIP). Kuttner correctly points out that the deal is not really about reducing trade barriers, which are already minimal, but rather about locking in place a business-friendly structure of regulation (wrongly described as "deregulation").

At one point Kuttner refers to projections that the TTIP will increase GDP in the EU and U.S. by 0.5 percent. It is important to note tha...

Robert Samuelson, the NAIRU, and the Accuracy of Economic Predictions

Robert Samuelson gave his assessment of where the economy stands in his column this morning. At one point he tells readers that if the economy creates 230,000 jobs a month, by the end of the year it will be approaching full employment.

Even if the economy adds 230,000 jobs a month in 2015, by the end of the year it will still be more than 3 million jobs below what the Congressional Budget Office (CBO) and other forecasters projected before the downturn. That would imply that the economy would...

Confusion on the Internet Is Not the Answer

The Washington Post once again displayed its contempt for economics when it published Michael Harris' book review of The Internet Is Not the Answer, a new book by Andrew Keen. Many of the central points in the review are seriously misleading or just outright wrong.

The best example of the latter is the claim in reference to the turning over of the backbone of the Internet from the government to the private sector in the 1990s:

"It was, in the words of venture capitalist John Doerr, 'the large...

The NYT Apparently Welcomes Job Loss and Lower Wages

That's what readers of a NYT article on the drop in the value of the euro would conclude. The piece told readers that the recent rise in the dollar is:

"A strong dollar is a welcome reflection of a United States economy that is growing and adding jobs at a faster clip than many of its peers."

Of course a strong dollar will make U.S. goods and services less competitive internationally, leading to a rise in the trade deficit. the drop in the trade deficit in the third quarter added 0.8 percenta...

European Union Imposes a Tax on Digital Transactions Equal to 0.006 Percent of GDP

The NYT reported that the European Union (EU) will start collecting a tax on digital transactions in 2015 that is expected to raise $1 billion this year. For those who are not very familiar with the size of the EU economy, it is projected to be close to $19 trillion in 2015, which means that the revenue from this tax will be a bit less than 0.006 percent of GDP.