Dean Baker's Blog, page 283

The Ebola Vaccine: How Drugs Can Be Developed Without Patents

For those who find it difficult to understand how drugs can be developed without patent protection, the Canadian government has an answer. It paid for the development of an Ebola vaccine. While the vaccine was reportedly 100 percent effective in tests with lab animals, the government did not pay for the testing in humans that would be necessary to market the drugs.

This provides a good example where a government agency was able to finance effective research. (There are many others.)  Unl...

The Banking Industry Wins On Risk Retention With Mortgages

It's too bad that so many people in public life aren't old enough to remember all the way back to 2008. That is the only explanation for the rush to remove down payment minimums for a risk retention requirement on mortgages placed in mortgage backed securities.

This is the topic of an excellent column by Floyd Norris on how the banking and housing industry, with the support of some consumer groups, managed to remove any down payment requirements. The idea was that banks would have to keep a p...

David Brooks' Great Adventures in Fantasy Land

David Brooks has a tough job. He is supposed to present an intellectually respectable case for a political party that denies human caused global warming and has questions about evolution and the shape of the earth. This is why he must depart from the truth in laying out the path forward for the economy in his column this morning.

He gives us four items to move the economy forward, but we don't have to get beyond the first one to realize that he is not serious. Brooks tells us:

"If you get out...

Wanting to Run a Marathon in Two Hours is Not the Same Thing as Having a Plan to Run a Marathon in Two Hours

That distinction would have improved the accuracy of a NYT article on the Republicans' economic plans. The piece noted that Senate Republicans have limited their economic agenda. It told readers that they no longer call for the repeal of the Affordable Care Act and have abandoned the "so-called Ryan Plan, a long-term budget to revamp Medicare and Medicaid and significantly reduce other domestic and military spending enough to balance the budget in 10 years, while sharply cutting taxes."

Actua...

Cut the Fracking Nonsense: Demand, not Supply Explains Low Oil Prices

Joe Nocera is anxious to credit shale oil with the recent plunge in oil prices, but our old friend Mr. Arithmetic sees things differently. In his column pronouncing the end of OPEC, Nocera credits the "shale revolution" in North America, which he credits with an additional 3 million barrels a day of production.

While this undoubtedly has put downward pressure on prices, it is not the major cause of price declines as can be easily seen from looking at the projections from before the economic...

The European Union's Greenhouse Gas Emissions Are Less Than Half as Much Per Capita as U.S. Emissions

That would have been useful background to be included in a NYT article on the European Union's plans for future emission targets. Many readers may not realize that the countries in the European Union are starting from a much lower emissions level than the United States. This means that reductions will be more costly to achieve.

Gretchen Morgenson Warns on Pensions and Private Equity (Guest Post)

by Eileen Appelbaum

Gretchen Morgenson had a great column in Sunday’s New York Times that pulls back the veil of secrecy surrounding pension fund investments in private equity. PE firm Carlyle recently agreed to pay $115 million to settle charges that it had engaged in illegal activities. Shockingly, neither Carlyle nor the firm’s executives and shareholders will pay a penny of this amount. Instead, it’s the pension funds and other limited partners in this PE fund that are on the hook for pay...

The Post Tells Us the Economy is SO Complicated

The Post is really angry that people are talking about the rich getting everything at the expense of everyone else. It demands in the headline of an article, "stop with the fiction of a binary economy." 

Actually, nothing in the article really gives us much reason to question the reality of the binary economy that many economists have written about. For example, it tells readers:

"The jobless rate in the center of the United States from North Dakota to Texas is less than 5 percent a...

In Context of Accusations of CIA Drug Smuggling, WaPo Calls $10 Million a Week "Relatively Small"

The movie Kill the Messenger has brought to new attention to charges that the CIA was involved in drug smuggling in the 1980s. The central allegation is that the CIA at least looked the other way, as its allies in arming the Contras trying to the Nicaraguan government smuggled large amounts of cocaine into the country. Jeff Leen, the Post's assistant managing editor for investigations, took up the issue in the Post's Outlook section today.

Leen is essentially dismissive of the charges, at one...

The Unmentionable Trade Deficit Doesn't Appear Again

It is really bizarre how folks find it so difficult to mention the trade deficit as the obvious source of weak demand in the economy. This is not a debatable point. We have a trade deficit of around $500 billion a year or roughly 3.0 percent of GDP. This is money that is creating demand elsewhere, not in the United States.

If we are going to maintain something like full employment then we need to make up this $500 billion in lost demand with higher than normal expenditures from another sector...