Dean Baker's Blog, page 34

The “Paycheck Protection Program” Is Designed to Give Workers Paychecks, Why Is This So Hard for the NYT to Understand?

The NYT had its second piece in a week on how business owners cant use the money from the paycheck protection program (PPP) to build their businesses. While it is understandable that business owners would like a handout from the government, that is not the purpose of the PPP.

The point of the PPP is to get workers their paychecks, or at least a large fraction thereof, not to support businesses. The businesses are essentially an intermediary. It should be a large help to these businesses to be...

Measuring Inflation in Times of Coronavirus

There has been some discussion of whether we should anticipate deflation or inflation as a result of the impact of the pandemic. I have been in the camp arguing the latter, based on the idea that precautionary measures will raise costs in major areas of the economy while reducing supply. (This is not an argument against stimulatory policies that are needed to restore employment. The inflation is a one-time price rise that will be reversed when we get effective treatments and/or a vaccine. It...

More Thoughts on a Wealth Tax and Alternatives

(This post first appeared on my Patreon page.)

Last week the Boston Review (BR) published an exchange on a wealth tax that included a proposal from Berkeley economists Emmanuel Saez and Gabriel Zucman, with a number of responses, including one from me. I was critical of the proposal for both political reasons and because I think avoidance and evasion will be massive problems.

On the political side, in addition to the difficulty of getting a wealth tax through Congress, there is the virtual...

More Quick Thoughts on the Recovery from the Crisis: Evidence from China

I have seen several accounts where people have warned that the recovery of the economy from the shutdown period will be very slow, with China being used as a major point of reference. For example, see this piece in the New York Times. I wont claim expertise on Chinas economy, but the evidence seems to suggest the opposite.

The highlight of this piece is the week recovery of retail sales which, if Im reading the chart right, are still 16 percent below year ago levels, one month after a...

Serious Class Bias at the NYT: How Much Money Should Taxpayers Give to Someone Who Owns a Large Bakery in Detroit? (Note corrected numbers)

(I have corrected the numbers in this post in response to a comment by Joe pointing out my mistake.)

Apparently the New York Times thinks we should give this person lots of money or at least that we should hear her argument that we should give her lots of money. Jackie Victor, the owner of a bakery that had employed 135 people is unhappy that the loan she got through the Paycheck Protection Program will only be forgiven for the portion spent on wages, rent, and other limited categories of...

Serious Class Bias at the NYT: How Much Money Should Taxpayers Give to Someone Who Owns a Large Bakery in Detroit?

Apparently the New York Times thinks we should give this person lots of money or at least that we should hear her argument that we should give her lots of money. Jackie Victor, the owner of a bakery that had employed 135 people is unhappy that the loan she got through the paycheck protection plan will only be forgiven for the portion spent on wages, rent, and other limited categories of expenses.

Ms. Victor complains that this money must be spent within 60 days, which apparently is finding...

Key Point on Those Going Back to Work: Low-Paid Workers Tend to Be in Poorer Health

Jim Tankersley had a very good piece in the NYT pointing out that those being forced back to work as the economy reopens are mostly lower paid workers, who dont have the option to telecommute and disproportionately people of color. One important point that was left out is that these workers are also more likely on average to have health conditions, such as diabetes, which hugely increase the risks they face from the coronavirus.

While even relatively healthy people face serious risks from the...

Comment on the Recovery from the Shutdown

The Congressional Budget Office came out with its new economic projections and they look realistically bad to me. They show the economy declining at a 39.6 percent annual rate in the current quarter and then rebounding at a 23.5 percent rate in the third quarter and closing out the year with a 10.5 percent increase. Unemployment averages 14.0 percent in the current quarter and rises to 16.0 percent in the third quarter. It falls back to 11.7 percent in the fourth quarter, but still averages...

Saving Journalism Will Require Some New Thinking

There has been a new wave of despair among journalists in the last couple of weeks as several major news outlets, including the Los Angeles Times and McClatchy News Service, announced layoffs and/or pay cuts. The immediate cause is the coronavirus. Pandemics sharply reduce advertising opportunities, but the underlying model is clearly not viable for most news outlets.

There is a limited amount of money that businesses are willing to pay for web ads, which is now by far the largest form of...

Can We Stop Using the 60,000 Death Projection Number?

Im not trying to be morbid, but it is obviously wrong. As of this moment, we have 47,700 reported coronavirus deaths. We have been seeing this number increase at a rate of more than 2,000 per day.  Furthermore, the number of people who are now dying typically got the disease two or three weeks ago, so unless we somehow develop a miraculous cure very quickly, a substantial percentage of the people who contracted the disease in prior weeks are going to die.

For this reason, it would be good if...