Dean Baker's Blog, page 300

Really Big Number Spent on High Speed Rail

The NYT had an interesting piece on the progress of high-speed rail under President Obama. As the headline tells it, we've spent $11 billion without all that much to show.

Just in case readers didn't know offhand, the federal government has spent roughly $550 billion on transportation over the last six years, so spending on high speed rail would be roughly 2.0 percent of total transportation spending. If you think this spending has been driving up your tax bill, this comes to roughly 0.05 pe...

It Ain't Obamacare or Skills: Full-time Nonsense on Part-Time Employment

Involuntary part-time employment has fallen by 670,000 over the last year, however it's still up by almost 3 million from its pre-recession level. While there would seem to be a very simple and obvious explanation for this one -- weak demand in the economy -- you can't employ many people saying the obvious. Hence we see a lot of nonsense in the media on the topic.

The latest installment comes to us from McClatchy News Service. The story is that the problem is skills and employer sanctions in...

NPR Can't Even Talk About Immigrant Doctors

There is a widely believed, but largely silly, view that rising inequality is the result of technology and globalization. NPR gave us an illustration of how silly this view is in a segment on plans in California to reduce the duration of medical school from four years to three years.

The ostensible motivation was to help address a shortage of primary care physicians. The reason why the piece is relevant to the larger issue of inequality is that it never once mentioned the possibility of bring...

Italy Is Back In Recession Because The European Union Is Defying Economic Logic

Students learn in introductory economic that Y = C+I+G +(X-m), which means that GDP is equal to the sum of consumption, investment, government spending and net exports. Those who remember their intro econ are not surprised to see that Italy has slid back into recession for the third time since the 2008 crisis.

Unfortunately simple economic logic does not find its way into the NYT article on the weakness of Italy's economy and much of the rest of the euro zone. The basic story is straightforwa...

Jeffrey Immelt Thinks It's "Just Wrong" He Has to Argue for the Money that He and GE Get from the Government

Yes, that is what he said according to the Washington Post. The context was a business summit involving U.S. and African business people and African heads of state. Immelt was complaining that the reauthorization of the Export-Import Bank is being seriously debated Washington.

The Bank makes or guarantees around $35 billion in loans, with the vast majority of the money going to large companies like GE, which Immelt heads. The Bank effectively is allowing these companies to get loans at below...

Population Growth Makes It Harder to Address Global Warming

That one should be obvious, but for some reason almost no one ever says it. This is why it is very nice to see Eduardo Porter's piece making the point in the NYT today.

The basic point is probably too simple for economists to understand, but if we have 20 percent fewer people in 2050 than in a baseline scenario, then they all can emit 20 percent more greenhouse gas (GHG) emissions in that year and have the same amount of total emissions. Alternatively, if we have the same amount of per capit...

The "Enormous" Cost of Corporate Inversions: Really Big Numbers at the Washington Post

In an article on corporate inversions (relocating their official headquarters to another country) the Washington Post told readers:

"the potential costs to the U.S. treasury are enormous. One measure, by the congressional Joint Committee on Taxation (JCT), suggests that the nation stands to lose nearly $20 billion in tax revenue over the next decade. Former JCT director Edward Kleinbard said he thinks the potential loss is much higher."

For those wondering how big a deal $20 billion over...

Maybe We Shouldn't Thank the Recession for the Slowdown in Health Care Costs

The Post's Wonkblog has a piece telling us that we should thank the recession for the slowdown in health care cost growth. I was one of those in the camp who thought the recession was responsible for the slowdown in health care growth in 2008-2010, however I think the explanation weakens as time goes on and costs continue to grow slowly.

The point is simple. Suppose that you have $10k slashed from your income in 2008 compared to its 2007 level. We might expect that you would spend less on hea...

NYT Says Fines Imposed on Banks After the Subprime Perps Left Make Justice Department a Tough Enforcer

Knowingly issuing a fraudulent mortgage (e.g. a mortgage based on false information) is fraud. It is the sort of thing that you can go to jail for, especially when it is done on a mass scale, as was the case in the financial crisis. Knowingly passing along fraudulent mortgages in mortgage backed securities is also fraud.

No important figure at any major bank was prosecuted for these activities by the Justice Department. As a result, virtually all of them benefited from their actions in the ho...

What's Holding the Economy Back: Revised Version

In the NYT Upshot section Neil Irwin had an interesting piece assessing which sectors are most responsible for the weakness of the economy. His culprits (in order) were residential invesment (housing), state and local government, durable goods consumption, business equipment investment, and federal spending. Irwin's methodology was to take the Congressional Budget Office's estimate of potential GDP (roughly 5 percent higher than the current level) and then assume that each component has the s...