Dean Baker's Blog, page 32

In Defense of the Fed’s Bailout

(This piece originally ran on my Patreon page.) I see that my friend, David Dayen, is highly critical of the Federal Reserve Board’s bailout of corporate America. I’m afraid that I will have to disagree with him on this one.

Before going into details, let me briefly give my bailout credentials. I was one of the few progressive economists who was opposed to the 2008-2009 bailouts. I argued at the time that it would have been better to let the market work its magic on Goldman Sachs, Citigroup, Ban...

Why Should Anyone Care About Paying Big Bucks for Vaccine Government Funded?

The New York Times ran a piece on the second round of government funding for the development of a coronavirus vaccine. The piece only mentions in passing the issue raised by some Democrats in Congress about the price of any vaccine that gets developed through this funding.

This is probably too simple for the NYT reporters and editors to understand, but the reason the government grants drug companies patent monopolies is to give them a way to recover their research costs. In this case, according ...

Republican Attacks on State and Local Government Are Yet Another Assault on Black People

Democrats in Congress have been pushing for a large amount of assistance for state and local governments in the next pandemic aid package. The finances of these governments have been devastated by the pandemic, with all of them seeing massive shortfalls in revenue due to the shutdowns and the weak economy that is projected for the months ahead. At the same time, they have had enormous demands for public services as a result of the pandemic, largely due to the need for additional health care spen...

Trump Veto Student Loan Debt Relief Measure Will Save Government 0.02 Percent of Projected Spending

Yesterday Donald Trump vetoed a resolution passed by Congress, which would have left in place rules making it easier for students to default on debt owed to for-profit colleges that had engaged in deceptive marketing practices. The Washington Post told readers that this veto is expected to save the government $11 billion over the next decade.

Most readers may not have a good sense of how much money $11 billion over the next decade is. The government is projected to spend 60,700 billion over this...

Washington Post Tells Readers About Trump’s “Existential” Threat to China

Thankfully, it is not a nuclear war. Apparently the Washington Post thinks plans considered by Trump to delist Chinese companies from U.S. stock exchanges and to make it more difficult for the country to trade in dollars will pose an “existential” threat to the country.

While these plans, which put into practice, will almost certainly sink the stock market and further alienate the United States from its traditional allies, it is very hard to understand how this could be an existential threat to ...

A Gilead-Remdesivir Fix: The Ten Percent Solution

The Washington Post had an excellent piece documenting how the government put up most of the money for developing remdesivir, a drug that now offers the hope of being the first effective treatment for the coronavirus. As the piece explains, in spite of the substantial contribution of public funds, Gilead Sciences holds a patent monopoly on remdesivir, which will allow it to charge whatever it wants without facing competition from other manufacturers.

There is a simple and obvious solution to thi...

Restaurants in the Pandemic

The NYT ran a column by a bar-restaurant owner telling of the horrible circumstances facing restaurants during and after the shutdown period. While the restaurant industry is among the hardest hit sectors, and many will not survive, a few of the complaints in the piece need some qualification.

For example it tells readers:

“Rent is obviously one of our biggest expenses, especially in larger cities. Rent easements are not voluntarily coming from landlords afraid that they will not be able to pay ...

The Sure Way to End Concerns About China’s “Theft” of a Vaccine: Make it Open

In the last couple of weeks both the New York Times and National Public Radio have warned that China could steal a vaccine against the coronavirus, or at least steal work in the U.S. done towards developing a vaccine. Both outlets obviously thought their audiences should view this as a serious concern.

As I wrote previously, it is not clear why those of us who don’t either own large amounts of stock in drug companies or give a damn about Donald Trump’s ego, should be upset about the prospect of ...

Can You Make Stagnating Incomes Go Away? The New York Times Wants You!

There is an endless market for pieces that tell us that the typical worker is doing quite well, in spite of all the gloom and talk we hear constantly. Michael Strain, who is actually a pretty good economist, took on the job in a column in the NYT yesterday.

The gist of Strain’s piece is that we shouldn’t be upset about inequality because the great fortunes at the top are really helping to make us all richer. He contrasts the 1990s, when inequality grew a lot, with the period from 2007 to 2017, w...

Washington Post Runs Major Article Saying Landlords Are Morons

The piece tells readers that small businesses in cities with high rents face a serious risk of bankruptcy. The point is very clear in the headline, small businesses in high-rent cities face disaster. If they go under, urban life will change.

The obvious problem with this story is that if large numbers of businesses go under, then it is hard to see how rents stay high. Landlords may not be the smartest folks in the world, but it doesnt take a genius to realize that you get more money from a...