Dean Baker's Blog, page 351

Lack of Unions Is Not a Draw for All Foreign Manufacturers in South Carolina

The NYT had a piece about the use of German-style apprenticeship programs in South Carolina. At one point it noted that, while the apprenticeship program is one factor attracting German and other foreign manufacturers to the state:

"there are other reasons foreign companies have moved here. For starters, wages are lower than the national average. Even more important for many manufacturers, unions have made few inroads in South Carolina."

It is worth noting that the German companies locating i...

Long-Term Unemployed Suffer from Discrimination, not Lack of Skills

Floyd Norris ends an interesting discussion on the increase in the rate of long-term unemployment by telling readers that many of the long-term unemployed lack the skills to take the jobs that are available. However, there is research that suggests this is not the case.

Rand Ghayad, a researcher affiliated with the Boston Federal Reserve Bank sent out matched resumes to employers with difference being that some reported being unemployed for more than 26 weeks (the definition of long-term unem...

Long-Tern Unemployed Suffer from Discrimination, not Lack of Skills

Floyd Norris ends an interesting discussion on the increase in the rate of long-term unemployment by telling readers that many of the long-term unemployed lack the skills to take the jobs that are available. However, there is research that suggests this is not the case.

Rand Ghayad, a researcher affiliated with the Boston Federal Reserve Bank sent out matched resumes to employers with difference being that some reported being unemployed for more than 26 weeks (the definition of long-term unem...

Subprime MBS With a Govenment Guarantee

Way back in the last decade we had a huge housing bubble which was propelled in large part by junk loans that were packaged into mortgage backed securities (MBS) by Wall Street investment banks and sold all around the world. Unfortunately few people in policy positions are old enough to remember back to the this era, which is why they are now in the process of altering rules so that investment banks will be able to put almost any loan into a MBS without retaining a stake.

As Floyd Norris expl...

Deflation Is Too Low a Rate of Inflation: End of Story

The NYT perpetuated nonsense about the magic of zero in a piece discussing recent measures of inflation and unemployment in the euro zone. It told readers;

"Deflation is considered even worse than runaway inflation, because consumers delay purchases in anticipation of ever lower prices, undercutting corporate profits and causing companies to stop investing in new plants and equipment. The result is rising unemployment and further downward pressure on prices.

"Economists at the advisory firm O...

Why Aren't We Rushing to Import More Doctors and Why Isn't the NYT Asking?

Roughly one third of all doctors are in the top one percent of the income distribution and the vast majority are in the top two percent. This likely explains both the reason as to why the government is not looking for ways to bring more doctors into the country and the reason the NYT is not raising the question in an article discussing a shortage of doctors willing to accept Medicaid reimbursement rates.

We have deliberately changed immigration rules and standards to make it easier for forei...

Dead Filipinos and Housing Bubbles Are Not Good News

Neil Irwin gave us a list of five economic trends to be thankful for this Thanksgiving. Two of the items do not belong there, or at least not without serious qualification.

First, Irwin lists lower gas prices. This is good news in the sense that it means more money in consumers' pockets. However it is not good news iinsofar as it encourages more gasoline consumption and therefore more greenhouse gas emissions. This will mean more loss of life and damage to property from rising ocean levels, d...

Neil Irwin Gets Consumer Confidence Right

Neil Irwin hit on one of my pet peeves last week, the meaninglessness of the consumer confidence indices. Big upswings or drops in these indices often make headlines, however they bear almost no relationship to actual movements in consumption. 

The story, or at least my story, is that people are largely answering based on what they hear in the news. If the papers are filled with stories of doom and gloom based on a budget standoff, looming debt default or some other bad story, people giv...

Can't the Washington Post Find Someone Who Didn't Miss the Housing Bubble to Talk to About the State of the Housing Market?

At its peak in 2006 the housing bubble in the United States created more than $8 trillion of bubble generated equity, making it the largest asset bubble in the history of the world. This one was easy to see to anyone who paid attention to fundamentals in the markets like long-term price trends, rents, and vacancy rates. The failure to see the bubble should raise questions about someone's competence as an expert on the housing market.

For this reason it is distressing to see the Washington Pos...

NYT Says Obama Administration Thinks the Government Has Obligation to Protect Investors Who Are Too Dumb to Judge Risk

This is effectively what the NYT told readers in an article discussing the reaction to a proposal by the IMF to require bondholders to accept losses when a government gets an IMF bailout. At one point the piece presented the comment of a Treasury Department spokesperson:

"It is important that efforts to increase the orderliness and predictability of the sovereign-debt restructuring process be undertaken on the basis of a consensual, market-based contractual framework."

It then added:

"Transla...