Dean Baker's Blog, page 381

The Trade Deals Are Complicated Because They Are Designed to Serve Special Interests

That minor detail was missing from Wonkblog's discussion of the proposed E.U.-U.S. trade agreement and the Trans-Pacific Partnership. The piece begins by telling readers in the first sentence:

"Nailing down complicated international trade agreements, with a zillion different interests and moving parts, is no easy feat."

It then adds that the Obama administration will be trying to do two deals at once and that it will have to contend with opposition in Congress.

Of course there is no reason th...

The European Central Bank Is a Much Bigger Problem for Italy's Young Than the Elderly

A New York Times article reported on the aging of Italy's population and bizarrely implied that this was the cause of high youth unemployment. The piece tells readers:

"With older people in the Mediterranean living longer and longer lives — and with fertility rates low and youth unemployment soaring in Italy, Greece, Spain and Portugal — experts warn that Europe’s debt crisis is exacerbating a growing demographic crisis. In the coming years, they warn, there will be fewer workers paying into...

GDP Growth Remains Below Potential Growth

The NYT piece discussing Federal Reserve Board Chairman Ben Bernanke's testimony before the House Financial Services Committee noted at one point the Fed's assessment that growth is proceeding at a "modest to moderate pace." It would have been worth noting that growth has been less than 2.0 percent for the last three years and is likely to remain below 2.0 percent at least for 2013.

This is below standard estimates of the economy's potential growth rate, which is put at 2.2 percent to 2.4 per...

Is Productivity Being Translated Into Pay Increases?

Jim Tankersley has a post in Wonkblog asking whether there has been a divergence between pay and productivity over the last three decades. The post notes a study from James Sherk at Heritage which makes several valid points. First, part of the gap between average pay and productivity is explained by a growing share of compensation going to health care benefits. Second part of the gap is the result of the fact that productivity is measured in gross output, whereas only net output is available...

Casey Mulligan is Right Again

I guess I'm about to join the Casey Mulligan fan club. Okay, not quite, but he was good enough to make a point that went against his general political view a couple of weeks ago, so I will take a moment to acknowledge a point that goes somewhat against how I generally see the world.

In his column today, Mulligan argues that policies like extending health care subsidies to people through health care exchanges and unemployment insurance must have some negative effect on employment at the margin...

China's Export Led Growth Model Wasn't Always So Export Led

Wonkblog has an interesting interview with Patrick Chovanec, an economics professor at Tsinghua University’s School of Economics and Management in Beijing on China's current economic problems. At one point Mr. Chovanec refers to:

"China’s growth model for the last 30 years, which has been a classic export-led growth model."

Actually China's growth over the last three decades has not been consistently export led, or at least not to the same degree as was the case in the 10 years leading up to...

This Is What Deflation Looks Like

Bruce Bartlett has a good piece on fears of inflation from the Great Depression. It's worth reading if for no other reason to show that otherwise intelligent people are able to believe completely absurd propositions about the economy and the world. (Sorry, worrying about inflation in the 1930s was loony.)

Anyhow, the piece is useful for another reason, Bartlett has a chart showing the rate of deflation at the start of the depression. Prices fell by 2.3 percent in 1930, 9.0 percent in 1931, 9....

Stiglitz Explains How Patent Protection Both Slows Growth and Increases Inequality

Very nice column from one of my favorite Nobel prize winning economists. Stiglitz explains some of the ways in which patent protection impedes growth and increases inequality.

It's great to see Stiglitz raising alternatives to patents for financing research, but I would disagree with the prize for patent buyouts that he proposes as being the best alternative. I have always preferred a system of direct upfront funding, which could be done through private firms operating on long-term contracts....

If the Robots Are Putting People Out of Work, Why Doesn't It Show Up in the Data?

A lot of people are making their living these days telling us that we aren't going to have any jobs because robots are going to do all the work. In this great country of ours, many are also making a very good living telling us that we are doomed by demographics, because we will not have enough children to support a growing population of retirees. And then we have those like Robert Samuelson who get paid to do both.

Here he is presenting the argument from Erik Brynjolfsson and Andrew McAf...

Why Is the NYT Such an Ardently Protectionist Newspaper?

Readers of the NYT must have been appalled to see that the only opinions presented in an article on a Brazilian plan to promote trade in physicians services were doctors who could expect to see lower pay as a result. This would be like reporting on a plan to reduce tariffs on imported textiles and only presenting the views of textile workers.

It would have been rather surprising if Brazil's doctors did not oppose a plan that would reduce their wages so it is not clear why the NYT apparently c...