Dean Baker's Blog, page 373

Richard M. Daley, the Bernie Madoff of Big City Mayors

The Washington Post ran an article on Bill Daley's decision to run for the Democratic nomination for governor in Illinois. The piece notes that Daley is the son of former Chicago Mayor Richard J. Daley and the brother of another former mayor, Richard M. Daley.

It probably would have been worth noting that latter connection is not likely to play especially well right now. Richard M. Daley failed to make the required contributions to the city's pension funds for his last decade in office, leav...

George Will Wants the Government to Do Scientific Research

George Will, who likes to mock any and everything the government does, has apparently decided that it is very good at supporting scientific research. He is outraged over the sequester, which is bringing a halt to several major research projects at the National Institutes of Health (NIH).

This is truly a fascinating line of argument from Will. He says that we need the government to do this research because it will not produce near term benefits:

"In the private sector, where investors expect a...

Steven Pearlstein Has Been to Ireland, Therefore He Is An Expert on Its Economy

It's always fun to have conversations with people who will proclaim themselves great experts on a country about which they may know very little because they have been there. I have encountered people who tell me poor countries are rich because they saw opulent homes and expensive restaurants on a visit, or that there is no unemployment in the middle of a downturn because every business owner they talked to couldn't find enough workers.

Steven Pearlstein gives us a wonderful example of such ar...

Getting to Full Employment: It Actually Is Not That Complicated

There are two types of people in the world: those who make complicated things simple and those who make simple things complicated. Paul Solman seems determined to convince us he is in the latter camp with his insistence that there is little or nothing we can do to address unemployment.

He raises many points in his response to my post, but I will start with a small one. Economics actually does not teach us that “every decision has both benefits and costs.” For example, if we can find a shortcu...

Rebound in the UK: Another Case of Incredibly Low Expectations

The NYT ran a Reuters piece touting the UK's return to growth after enduring a prolonged period of recession and stagnation. It would have been worth mentioning that even on its current path, the UK will just be passing its 2008 level of output in 2014. Even with the return to growth, the IMF projects that per capita GDP in the UK will not pass its 2007 level until 2018.

Source: International Monetary Fund.

Detroit's Problem is Doctors Get Protection and Autoworkers Don't

It is standard practice in elite circles to blame U.S. workers for their lack of jobs and low wages. The problem is they lack the right skills to compete in the global economy. The NYT gave us another example of this complaint with Stephan Richter's column today.

While it would be desirable to have a better trained and educated workforce, the reason why our manufacturing workers lose out to international competition, while highly educated workers like doctors and lawyers don't, is that the la...

Do People With a $300,000 Home and a $150,000 Mortgage Spend Less Than People With No Home and No Mortgage?

Readers might think that they would after reading Wonkblog's piece, "Five facts about household debt in the United States." The piece begins by telling readers:

"The U.S. economy has been growing glacially for the last four years. And, by almost all tellings, the overhang of debt from the pre-crisis years is a big part of the reason why."

Is that so? There seems to be a very simple story that does not hinge on debt overhang. When the housing bubble collapsed it destroyed $8 trillion iin housi...

Paul Krugman Misrepresents the Truthiness of Erskine Bowles and Alan Simpson (It's a Joke -- Lighten Up Folks)

Paul Krugman devotes his column today to the unreality of the debate in Washington on the budget and the deficit. Towards the end of the piece he refers Erskine Bowles and Alan Simpson the co-chairs of President Obama's deficit commission:

"People like Alan Simpson and Erskine Bowles, the co-chairmen of President Obama’s deficit commission, did a lot to feed public anxiety about the deficit when it was high. Their report was ominously titled 'The Moment of Truth.'"

While Krugman is correct in...

Doctors Report Assault Victim Feeling Better, Attribute Improvement to Vicious Beating

Readers of the Financial Times will undoubtedly be looking for this headline in future editions after seeing that:

"Berlin and Brussels credit fiscal discipline and reform for euro zone recovery."

As predicted by non-members of the flat earth society everywhere, the "fiscal discipline" pushed by Berlin and Brussels has led to severe recessions across much of Europe.The story is very simple. In the middle of a severe downturn, cutting back government spending and/or raising taxes lowers demand...

In Economic Theory Folklore Inflation Is Caused by Low Unemployment, Not Fast Growth

Neil Irwin has a discussion of the growth potential of the U.S. economy that follows the work of two JP Morgan economists. The basic story is quite pessimistic, arguing that we will see rapid declines in labor force participation and much slower productivity growth in the future. I won't comment on these points at length here (the evidence presented is limited in the piece and weak), but will rather focus on the conclusion.

The piece ends by warning readers:

"And if the analysis is right, and...