Dean Baker's Blog, page 276

The Joint Center for Housing Studies at Harvard, Which is Best Known for Denying the Existence of the Housing Bubble, Still Says Homeownership Is the Best Route to Building Wealth

The NYT tells us that we should still be pushing people to be homeowners, based largely a report by the Joint Center for Housing Studies at Harvard, which gets much of its funding from industry groups. The editorial is in many ways a classic exercise in bad logic.

The basic point seems to be that homeowners accumulate more money on average than renters. While this is true, the relevant question is not whether homeowners accumulate more money, but rather whether homebuyers accumulate more mone...

Misplaced Optimism and Fears on Greece

Nicholas Gage uses a NYT column to tell us that Greece is on the path to recovery and that the main risk to its prosperity is the rise of the left-wing political party Syriza. Both claims are dubious.

In terms of the recovery, Gage points to the country's strong third quarter growth, increased tourism, an improved budget situation and a decline in the unemployment rate. While the lower deficits would be good news, if the European Union was prepared to allow Greece to have a substantial stimul...

Keynes and the Slow Boat

Paul Krugman tells us that "Keynes is Slowly Winning." The immediate cause for celebration is Catherine Mann, the new chief economist at the OECD, calls for stimulus. By contrast, her predecessors in 2011 were calling for rapid increases in interest rates to normalize the economic situation.

This is indeed good news, but as a practical matter the flat-earth crowd is still calling the shots outside of Japan. There is little hope for real stimulus any time soon. The Austerians in power in the E...

Obamacare: Confusion in High Places

Much of the public remains badly confused about the Affordable Care Act (ACA). This shouldn't be a surprise. It is a complicated bill. Also, there has been much effort to deliberately create confusion. For example, Republicans invented stories of ACA death panels and massive job loss. Major media outlets, in their commitment to neutral reporting, treated such claims seriously, along with the assertion that the earth is flat.

While the public's confusion is understandable, if regrettable, the...

NYT Claims That Ending France 35-Hour Work Week Would Hugely Increase French GDP

Of course it had no evidence, but hey, if you don't like the 35-hour work week, who needs evidence. The comment came in an article discussing the debate over changing the 35-hour work week, which requires that employers pay an overtime premium for additional hours.

The piece told readers:

"The law has not improved an unemployment rate that, at 10.2 percent, hovers near a high."

It would be fascinating to know how the NYT reached this conclusion. If people worked more hours, and the unemployme...

Wall Street Journal and Charles Schumer on Obamacare

The Wall Street Journal applauded Senator Charles Schumer for saying that the Democrats made a mistake by pursuing health care reform rather than promoting economic recovery. This of course raises the obvious question, what policies exactly would Senator Schumer have put forward to promote economic recovery had the Democrats not pursued health care reform? Would there have been a much bigger stimulus with much larger deficits? Would we have had a more serious financial reform that broke up th...

Profit Share Drops: No One Notices

The gods of national income accounting gave us some good news for Thanksgiving but it seems no one noticed. The data on corporate profits released in yesterday's GDP report showed that the slight downward trend in shares in recent quarters is continuing. The profit share of net corporate income was 20.5 percent in the third quarter, down from a peak of 21.2 percent in the second quarter of 2013. Quarterly data are erratic but if we take a four quarter moving average we get the share was 20.2...

Robert Samuelson Doesn't Like Social Security, Again

As much as some folks might hate this fact, the government is sometimes more efficient than the private sector. This is true in the case of providing a retirement income to workers. It is also true when it comes to providing health care insurance. This is one of the main reasons that we have a government-run Social Security and Medicare program.

This means that because we have a large population of retirees we will have a relatively large government, since it costs a fair bit for tens of mill...

Strange Reuters Commentary on Economic Populism

Most news outlets try to make sure that their commentators at least have some idea of the topics on which they comment. Apparently this is not the case with Reuters, which gave Hugo Dixon the opportunity to condemn the economic populism that is gaining support across Europe. (The NYT reprinted the piece on its website.) Dixon tells readers:

"The cures proposed by the populists, however, are worse than the disease. UKIP wants to pull Britain out of the European Union. The National Front wants...

It Would Take a Lot of Mismanagement to Raise the Cost of Treasury Debt by "Just" 20 Basis Points

Andrew Sorkin criticized Senator Elizabeth Warren for her opposition to Antonio Weiss, President Obama's nominee to be the under secretary of Treasury for domestic finance. Sorkin argues that Warren is mistaken about his role in corporate inversions done to evade U.S. taxes. He also argues that his background makes him uniquely well-suited for this position because it involves the sale of government debt and:

"If the interest on the securities the Treasury sells was just 20 basis points highe...