Dean Baker's Blog, page 338

Mobility and Inequality: More on Non-New Findings

Robert Samuelson is happy to tell us that contrary to what he hoped some of us believed, there was not much change in mobility for children entering the labor force between the first President Bush and second President Bush's administrations. Samuelson misrepresents the study to imply that it finds that there has been no change in mobility over the post-war period.

"By the conventional wisdom, American society is becoming more rigid. People’s place on the economic ladder (“relative mobility”)...

Fun With Scary Pension Numbers in Chicago

I see they are playing the really big number game in my home town. The Chicago Tribune headlined a news story: "Chicago pension tab: $18,596 for every man, woman, child." That's pretty scary. Fortunately my Chicago public school teachers taught me about fractions and denominators. That is what is missing here.

The key point is that Chicago does not have to pay this money tomorrow or even over the next year. This is a liability over the next 30 years. The relevant denominator then is Chicago's...

Charles Lane Comes Out Against Freedom of Contract

Washington Post columnist Charles Lane took great leaps in philosophical thinking today, coming down firmly against freedom of contract when it comes to public sector unions. In the course of the discussion Lane develops several new principles for guiding public sector policy.

The starting point is whether public sector workers can sign contracts that require all the workers who are represented by a union to pay for that representation. The courts have long upheld that workers could negotiate...

Fraternity Type Reporting on Budget and Food Stamp Cuts at the WaPo

Budget reporters are apparently all in some secret fraternity in which they practice bizarre rituals like using numbers that will be meaningless to almost of their readers. Hence we get the Washington Post telling us:

"Negotiators agreed Monday evening on a new five-year Farm Bill that slashes about $23 billion in federal spending by ending direct payments to farmers, consolidating dozens of Agriculture Department programs and by cutting about $8 billion in food stamp assistance."

Okay, how b...

At Each SOTU The Economy Has Been in the Best Shape Since President Obama Took Office

The NYT had a peculiar account of the state of the economy in its lead up to the state of the union address. At one point it told readers that:

"several indicators show that the economy is in its best shape since he took office in 2009."

This is peculiar since it would have been true in 2010, 2011, 2012, and 2013 also. In effect, the recession could be seen as throwing the economy into a big hole. We have been climbing out of the hole ever since. It would take an extraordinary turn of events...

Harvard Economist Robert Lawrence Asks for an Intro Econ Lesson on Macroeconomics and Trade

And here at Beat the Press we are happy to oblige, at no charge to Mr. Lawrence. Brad Plumer caught Robert Lawrence claiming that increased oil production in the United States will not reduce the size of the trade deficit.

According to Brad, Lawrence said that the trade deficit is determined by the balance of domestic savings and investment. He then quotes Lawrence:

"Unless you can tell me how the oil boom will change that pattern of savings and investment ... then it's not going to change th...

Robert Samuelson Still Hasn't Heard About the Housing Bubble, #24,201

The story of the housing bubble and the impact of its bursting is pretty damn simple. If we go back to the bubble years, 2002-2007, the housing market was driving the economy. It was doing this both directly as construction spending peaked at close to 6.5 percent of GDP, two percentage points above its average over the prior two decades. It also drove consumption as people spent based on the equity in their home created by the bubble. The savings rate fell to almost zero based on this housing...

Funny Numbers on Housing

One of the reasons that the housing bubble caught so many people by surprise was that the media relied largely on people who had an interest in pushing housing as their sources in reporting. This still seems to be the case today as indicated by a NYT piece on the housing market.

At one point the piece cites economist Mark Zandi, telling readers:

"Tighter lending standards are shutting out close to 12.5 million consumers who would qualify in normal times."

It's difficult to attach any meaning...

Steven Rattner Has Another Confused Piece About the Economy in the NYT

Steven Rattner took up large chunks of the NYT opinion section to express confused thoughts on manufacturing. Rattner sorts of meanders everywhere and back. The government should help manufacturing, but not like Solyndra and Fisker. Right, we don't want help the losers, we just want to help all the companies that got loans and were successful. Does Rattner want to tell us how we would determine in advance which ones those will be?

We want better education. Sure, that's great, any ideas on how...

NPR Discovers That Obamacare Needs Healthy People, It Doesn't Matter If They Are Young

All Things Considered ran a piece making the obvious point, it doesn't matter for the finances of the health insurance exchanges whether or not young people sign up. What matters is that healthy people sign up. Some of us have been making this point for a while, but it's great to see that major national news outlets are capable of learning.