Dean Baker's Blog, page 317

Larry Summers Gets It Right on the UK

Larry Summers had a good piece in the Post pointing out that the recent growth in the United Kingdom should not really be cause for celebration. He notes that the U.K.'s economy is growing in part because it has moderated its austerity and also in part because it appears to be carrying through policies that are deliberately designed to re-inflate its housing bubble. The latter policies are likely to have disastrous consequences in the near future, but may help the government win the election...

A Weak Economy Is the Perfect Time to Spend Money to Combat Global Warming

The Post had a major front page article reporting that President Obama plans to focus on global warming in the remaining years of his presidency. At one point it tells readers;

"during his first term the president’s top aides were sharply divided on how aggressively to push climate policy at a time when Americans were anxious about the economy."

This is a striking statement since the main problem facing the economy, insufficient demand, could have been effectively addressed by measures to slo...

Wage Inflation Does Not Just Explode

The NYT had an interesting piece presenting the argument that the Federal Reserve Board should focus on wage inflation rather unemployment, not beginning to tighten up until wage inflation started to get above 3.0-4.0 percent, a rate consistent with its 2.0 percent inflation target. The piece included a counterargument from Torsten Slok, chief international economist at Deutsche Bank Securities, that if the Fed waited until it saw rising wage growth it would be too late. Inflation would...

Nope, Robert Samuelson Is Wrong Again, the Housing Bubble Did Cause the Recession

Robert Samuelson actually has a lot of sensible things to say about bubbles in his column today, until we get near the end:

"it was not simply the bursting of the housing bubble that created the Great Recession. Consider the contrast between the 1990s’ tech-stock bubble and the housing bubble. Both inflicted multitrillion-dollar losses. Yet the first caused only a mild recession while the second plunged the economy into a deep and stubborn slump. Why?

"The difference is this: The housing bubb...

A Heaping Dose of Economic Nonsense from Thomas Friedman on China

No one expects to get serious insights on the economy from reading Thomas Friedman, but he really went off the deep end in today's column. The piece is a diatribe about how our economic weakness is preventing the United States from acting like a real superpower.

At one point Friedman tells readers:

"We need to counterbalance China in the Asia-Pacific region, but that is not easy when we owe Beijing nearly $1.3 trillion, because of our credit-fueled profligacy."

Presumably Friedman is referrin...

Washington Post Can't Even Talk About Alternatives to Patent Support for Prescription Drug Research

Just as the media in the Soviet Union were not allowed to talk about alternatives to one-party rule, the Washington Post apparently can't raise the issue of alternatives to patent supported drug research in the United States. This should be apparent to readers of an article on Sovaldi, a new drug to treat Hepatitis C.

The drug is currently subject to a government granted patent monopoly which allows its manufacturer, Gilead Science, to sell a year's dosage for $100,000. By contrast, a generic...

Deficit Dogma Runs Deep Even at the New York Times

This is one of those strange but true stories. Here's the description of Paul Krugrman's column from NYT opinion page for Friday:

 

PAUL KRUGMAN
Why Economics Failed

Though it’s true that few economists saw the fiscal crisis coming, policy makers and politicians ignored both the textbooks and lessons of history. Comment

 

You have 30 seconds to see the problem in this story.

That's right, Krugman doesn't believe there was a fiscal crisis, in fact he has vigorously argued the opp...

The Story of How Trucking Jobs Became Low-Paying Jobs

Very good piece in the Washington Post on how the trucking industry contracted out to push down wages in trucking. Now many independent truckers don't earn much more than workers in fast-food restaurants.

Richard D. Parsons: Director of the Day

Directorships, 2008 - 2012: 5

Total director compensation, 2008 – 2012: $3,572,317

Average annual director compensation, 2008 - 2012: $714,463

Average compensation per full year of service as director: $229,655

Richard D. Parsons has enjoyed a long career at the intersections of business and politics. As a young man he became close with former New York Governor Nelson Rockefeller, on whose gubernatorial staff he worked. When Rockefeller became vice president, Parsons went to work for him in...

Bill Clinton and the Trade Deficit: Is There Some Reason We Can't Talk About It?

Following the NYT, the Washington Post had an article on Bill Clinton's economic legacy today. And like the NYT piece yesterday, the Post did not mention the soaring trade deficit. (See my complaint about the NYT piece here.)

This is not a small matter. The trade deficit was less 1.0 percent of GDP when Clinton took office, it was almost 4.0 percent when he left, and headed upward.This increase would be equivalent to more than $500 billion in today's economy.

And this increase was largely a r...