Dean Baker's Blog, page 379

The IMF Projects Weak Growth Across the Euro Zone

A Washington Post article noting the IMF's projections for weak growth and rising unemployment in the euro zone told readers:

"For 2014 as a whole, growth of 0.9 percent is forecast.

That is not only weak, it also masks the continued wide divergence in outcomes among the euro countries, with some nations likely to remain in recession and some growing at a faster pace. The gap in performance — between Germany’s globally competitive export sector and the stalled economies of southern Europe — i...

Tracking Middle Class Family Income: Wonkblog versus the President

Dylan Matthews takes President Obama to task over at Wonkblog for saying in his speech on Wednesday that the typical family's income has barely budged over the last three decades. As Dylan points out, median family income increased by 17.7 percent from 1979 to 2007. That's not great, it had increased by 113.2 percent in the the prior three decades (State of Working American 2012-2013 [SWA], Table 2.1), but it's not zero.

So we can say that Obama was not exactly right on this front. But there...

CEPR's New Budget Calculator Takes a Quick Trip Over to the Chronicle of Philanthropy

There we find an article on House Appropriations Committee approving a bill to cut funding for the National Endowment for Humanities by almost 50 percent. The piece tells readers:

"The measure would allocate $75-million to the NEA, a level last seen in 1974. The president’s proposed fiscal 2014 budget seeks $154.5-million for the grant-making agency."

Using the CEPR budget calculator, it could explain that:

"The measure would allocate $75-million to the NEA, a level last seen in 1974. The pre...

Larry Summers’ Bad Math

The debate over Larry Summers’ potential appointment to Fed chair provides an excellent opportunity to explain the logic behind one of his biggest policy missteps. During the East Asian financial crisis he worked alongside Robert Rubin and Alan Greenspan to impose a solution that required the countries of the region to repay their debts in full. The quid pro quo was that they would have the opportunity to hugely increase their exports to the United States in order to get the dollars needed to...

Robert Samuelson Is One Third Right

Robert Samuelson says that we have a weak recovery, that employers are shifting from full time to part-time employment, and the cause is the Affordable Care Act (ACA). This gives him a batting average of 333, pretty good for the Post.

The first part is undeniably true. This recovery is very weak compared to prior post-war recoveries. Of course that is not surprising to fans of economics and arithmetic. This recession was brought on by the collapse of a housing bubble, not the Fed raising int...

Why Do We Think That If There Is Sharp Upward Pressure on Wages, Workers Will Not be Able To Support Retirees?

Yet another which way is up problem in the NYT. A NYT article on a killing in China turned to the country's one-child country, concluding by telling readers:

"The policy has also begun to shrink the number of young workers in the labor force, putting sharp upward pressure on factory wages while raising concerns about how to accommodate and financially support the steady growth in the number of elderly dependents."

Sorry, but that one makes no sense. Suppose it said that:

"investment bankers a...

Using the New CEPR Budget Calculator to Improve the NYT's Budget Reporting

Today we are going to use CEPR's patented new budget calculator to improve a NYT budget article so that it is more meaningful to people who read it. The focus of the piece is efforts by House Republicans to sharply reduce spending from current levels.

One paragraph tells readers:

"For the fiscal year that begins Oct. 1, Mr. Obama requested nearly $3 billion for renewable energy and energy efficiency programs — a mainstay of his economic agenda since he was first elected. The House approved $8...

Why Is Teva Being Given a Monopoly on Selling Plan B One-Step?

That's what readers of this Post tidbit would like to know. The item tells readers that Teva will be granted exclusive marketing rights for three years. This means that it can sell the drug for considerably more than its free market price. That implies a transfer of tens or hundreds of millions of dollars to the executives and shareholders in Teva from the rest of us. It's not clear why we should tax the public as a whole, or women who buy the drug to make these people richer. The Post should...

Harold Meyerson Mostly Right on Goldman and Speculation

Harold Meyerson has a good column noting Goldman Sachs role in manipulating prices in the aluminum market and arguing for a new Glass-Steagall Act prohibiting banks from getting into other lines of business. The points are well taken but the description of Goldman's ability to manipulate prices in the aluminum market go beyond just bank abuses. The allegations against Goldman Sachs raise basic anti-trust issues.

If any firm is able to manipulate prices in a major market in the way Goldman app...

Government Granted Patent Monopolies Lead to Corruption in Drug Research in China Also

Imagine that, interference in the market that raises prices to hundreds or thousands of times the free market price leads to corruption in the research process in China. Interesting piece in NYT.