Dean Baker's Blog, page 310

Coal Mining Is Responsible for 0.6 Percent of Employment In Kentucky

The Washington Post noted Kentucky Senator Mitch McConnell's efforts to block President Obama's new proposal for reducing carbon dioxide emissions by closing coal plants. It told readers:

"coal is a major source of energy and jobs in McConnell’s state and in several others represented by Democratic senators who are seeking reelection this year."

According to data from the Bureau of Labor Statistics Current Employment Situation survey, the coal industry employs 11,600 workers in Kentucky. This...

Robots and Productivity Growth

Steve Rattner has a column in the NYT in which he correctly argues that robots should not provide any reason for concern about future labor market prospects. As Rattner correctly points out, robots are just another form of productivity growth. As a general rule, productivity growth allows for rising living standards and more leisure. Rattner is also right to point out that productivity growth has actually been unusually slow in recent years, the opposite of the concern about robots destroying...

If We Stopped Coddling Doctors Would the Kids Still Be at Home?

Adam Davidson has an interesting piece in the NYT Magazine noting the rapid growth in the percentage of young adults who continue to live in their parents’ home well into their 20s. The main explanation for this shift is the deteriorating labor market prospects for young people. While the piece does note this fact and has some discussion of the causes, it would be worth going into the latter in a bit more detail.

The country has pursued a set of policies over the last three decades that have...

Paul Krugman on Savings, Investment, and the Trade Balance

Paul Krugman may have misled readers of his blog yesterday with the comment:

"the trade balance is a macroeconomic phenomenon, determined by the excess of savings over investment."

As an accounting identity the trade deficit is equal to the excess of national investment over national savings. However it would be wrong to conclude that the U.S. trade deficit is caused by our failure to save enough, especially in the current context where the economy is well below its potential level of output....

Higher Interest Rates Lead to More Investment

That appears to be the central claim of Kevin Warsh and Stanley Druckenmiller in a Wall Street Journal column criticizing the Fed's asset buying program. The central claim appears to be that because asset prices have rising, companies have been discouraged from undertaking productive investment. While Warsh and Druckenmiller are certainly right that the asset buying program has had limited benefits for the real economy, it doesn't follow that the economy would be stronger without it.

First, t...

NYT Whitewashes German Right-Winger

The NYT ran a piece profiling former IBM executive and Bank of America adviser Hans-Olaf Henkel, who is now head of a German anti-euro party. While it discusses much of his background in business and politics, it neglected to mention his efforts to blame the U.S. housing bubble and financial crisis on anti-discrimination laws. Specifically, he attributed the crisis to the 1977 Community Re-investment Act (CRA), which prohibited banks from discriminating based on the racial compensation of a n...

Contrary to Neil Irwin, "We" Are Not All Crony Capitalists

Neil Irwin is trying to implicate the rest of us in his desire to subsidize Boeing and other big corporations through the Export-Import Bank. The Ex-Im Bank provides below market loans to select projects in order to help make sales in both directions. Irwin tells readers the debate over the bank provides:

"A fascinating case study in how modern economies really work, and the ways big business and big government are inevitably intertwined in ways that believers in free markets may not like — b...

The Good News About Argentina's Economy Is That It Is Nowhere Near As Bad As Reuters Wants You to Believe

Reuters wants its readers to believe that "analysis-wary Argentines" are disgusted with their government's economic policies as "jobs [are] becoming harder to find." While there is little doubt that Argentina is experiencing difficult economic times, it certainly is doing much better than countries that have followed an austerity path, like Greece, Spain, and Portugal, all of which are experiencing double-digit unemployment rates.

In fact, Argentina's 7.6 percent unemployment rate is less tha...

Real Wages and May Inflation

In the NYT's Upshot section Neil Irwin correctly notes that real wages have been nearly stagnant in the recovery, however he makes too much of the inflation numbers from the last couple of months. The Bureau of Labor Statistics reported that inflation rose 0.3 percent in April and 0.4 percent in May. These increases were enough to wipe out modest real wage gains reported in prior months so that the average hourly wage has now fallen slightly over the last year, adjusted for inflation.

While t...

Aid to the Poor Did Not Grow Relative to GDP

Thomas Edsall had an interesting piece in the NYT that discussed the shift of aid to the poor from people who are very poor, unmarried, and non-working to the near poor, married, and working. At one point the piece refers to a comment from economist Robert Moffitt that spending on poverty programs increased by 74 percent from 1975 to 2007, after adjusting for inflation. This may have led readers to believe there was an increasing commitment to combat poverty over this period. In fact, since G...