Dean Baker's Blog, page 369

NYT Thinks We Should Celebrate Overcrowded Beaches and Environmental Degradation

A NYT article applauded reports that the birth rate stablized in 2012 after declining sharply in the years from 2007 to 2011. While it is clearly good news insofar as birth rates are a measure of the economic security of young families, there is no reason that the rest of us should want to see more children.

The piece tells readers that higher birth rates are associated with higher economic growth. This is true, but they are not necessarily associated with higher per capita growth. Bangladesh...

People Without Names Continue to Push for Larry Summers

If the new Fed chair was being selected by people without names Larry Summers would win hands down. The Post gives us yet another article assuring us that Larry Summers is a good guy that depends almost entirely on unnamed sources.

The article gives us supportive comments from "many of his colleagues," "people close to Summers," and "one person who knows Summers." There is one named source in the piece. That would be Chrtistine Romer, the former head of the Council of Economic Advisers, who...

Restaurant Work in the States and the Loss of Middle Class Jobs

I did a short post while everyone was out enjoying their Labor Day weekend that I want to briefly revisit. The topic was the growth of bad jobs in the current recovery.

As many people have noted, a disproportionate share of the jobs being created in this upturn are in low-paying sectors like restaurants and retail trade. This means that even the people who are able to find work in the current labor market conditions are unlikely to get a job that will provide enough income to support a family...

Robert Samuelson Underestimates the Cost of War

Robert Samuelson used his column today to dismiss the idea that the nation could be "war weary." He correctly notes that a relatively small segment of the population has either served in recent wars or has close relatives who served. However his discussion of the costs is misleading.

He tells readers:

"From 2001 to 2012, federal spending totaled $33.3 trillion; the wars were 4 percent of that. Over the same period, the American economy produced $163 trillion of goods and services. War spendi...

Is Phillip Swagel Looking at the Same Numbers as the Rest of Us?

That's what readers of the NYT's Economix blog must be asking. Swagel used his column today to complain:

"The improvement in the budget outlook for this year and the next several has empowered the fiscal “ostrich caucus,” but does not change the reality of a “severe long-run fiscal imbalance.” President Obama has spoken about the need to take on the long-term fiscal challenge. But this requires making difficult choices to address the funding gaps in Social Security and Medicare, and on this M...

News for NYT: India's Central Bank Can Affect Its Trade Deficit

A NYT article on Raghuram Rajan, the new head of India's central bank, told readers:

"Some of the biggest problems bedeviling the Indian economy are beyond his control, like the trade and government budget deficits and the crippling shortage of roads and other infrastructure."

Actually the trade deficit is fairly directly under the central bank's control. It can raise or lower the value of the rupee, India's currency. By allowing the rupee's value to fall, Rajan can make India's goods more co...

Washington Post Continues the Beatification Process of Larry Summers

If one were to list the people most responsible for the country's dismal economic state few people other than Alan Greenspan and Robert Rubin would rank higher than Larry Summers. After all, Summers was a huge proponent of financial deregulation in the 1990s and the last decade. He was a cheerleader for the stock bubble and never expressed any concerns about the housing bubble. He thought the over-valued dollar was good policy (and therefore also the enormous trade deficit that inevitably fol...

Maybe Business Doesn't Spend on Campaigns for the Same Reason Opponents of Prohibition Don't

Eduardo Porter's column notes evidence that individual donors are becoming increasingly important to political campaigns while business donors appear to be less important. The column interprets this to imply a lessening of their political influence, especially over the Republican Party.

There is an alternative explanation. After-tax corporate profits are at their highest level in the post-war period. This suggests that business has collectively been enormously successful in pushing its agenda...

The New York Times Sees the Solution to Euro Zone Imbalances as a Problem

The countries of southern Europe (Spain, Italy, Portugal, and Greece) have enormous trade imbalances with the countries of northern Europe, most importantly Germany. This is the core problem facing the euro zone economies. In order to limit the size of these imbalances, the European Central Bank (ECB) and the European Commission (EC) are demanding that the southern countries sharply reduce their budget deficits. This has thrown these countries into severe recessions with double-digit unemploy...

OECD Sets Low Bar For U.S. Growth

According to the New York Times, the OECD sees both Japan and the United States as growing at "encouraging" rates this year. The article reports the OECD expects the U.S. economy to grow at a 2.5 percent rate in the third quarter and 2.7 percent in the fourth quarter. This would bring the growth rate for the full year to 2.2 percent. That is roughly equal to the economy's potential growth rate, which is usually put between 2.2-2.4 percent. That would mean the country is making up no progress...