Dean Baker's Blog, page 383

Celebrate: EU-US Trade Agreement Could Raise Growth by 0.03 Percentage Points!

Nope, that is not a typo. According to a study (Table 16) cited in an NYT article on a possible trade deal between the United States and the European Union, GDP in the United States could be 0.39 percentage points higher in 2027 as a result of a trade deal. Of course this is their optimistic scenario in which most of the barriers they do not like are eliminated. In their less optimistic case, the gains would be just 0.21 percentage points by 2027, implying an increase in the annual growth rat...

Orrin Hatch Wants AIG to Provide Pensions for Public Sector Workers

No, I am not kidding. The NYT reported that Hatch is introducing a bill that would allow states to turn over the management and responsibility for pension plans to insurance companies. The NYT presented this sort of switch as good news for both workers and taxpayers, noting regulatory requirements for insurers:

"Perhaps more important, state insurance regulators provide a kind of oversight unknown in the world of public pensions. They require insurance companies to meet capital requirements,...

How Bad Is the Bernanke Taper?

Paul Krugman, among many others, has been denouncing the decision by Federal Reserve Board Chairman Ben Bernanke to discuss plans for backing away from the current pace of quantitative easing. While I agree completely with his logic, I am bit less concerned about the downside than he seems to be.

Krugman is certainly right that there is no reason to be talking of tapering right now. We are close to 9 million jobs below the trend level of employment. By the Congressional Budget Office's estima...

Partying at the NYT Over Increased Unemployment and Slower Growth

The NYT tells us that it is good news that we are seeing higher unemployment and slower growth than would otherwise be the case as a result of partisan gridlock in Congress. Of course it did not put it in quite those terms, but an article on Congressional gridlock told readers:

"The upside of inaction is its impact on deficit spending. Total discretionary spending in the fiscal year that ends Sept. 30 will be about $70 billion below the previous year’s — the first such drop since fiscal 1996,...

Robert Samuelson Gets Vacation Story Mostly Right

I should be happy. Robert Samuelson has a good column that centers on the "No Vacation Nation Revisited" report that CEPR published a couple of months ago. 

Samuelson picks up the report's main points. There has been a huge divergence in work hours between the United States and other wealthy countries over the last three decades. In other wealthy countries all workers are guaranteed 4 or more weeks a year of paid vacation. In the United States there are no legal guarantees of paid vacati...

Pay Increases Went to Higher Paid Workers, Not Overtime

The Wall Street Journal had a piece touting the broad nature of the job growth in Friday's jobs report. The piece noted that average hourly wages rose 10 cents last month and are now up by 2.2 percent from year ago levels. It then added:

"However, that may have more to do with overtime pay than real wage increases, said Peter Cappelli, a professor at the University of Pennsylvania's Wharton School and director of its Center for Human Resources. The Labor Department distinguishes regular pay f...

Zero Evidence on Employer Mandate Costing Jobs or Cutting Hours

On the right side of the political spectrum it has become an article of faith that the employer mandates in the Obama health care plan reduced work hours and delayed hiring. In order to preserve his standing on the right, Ross Douthat included this mantra in his column today, asserting that this was the reason the Obama administration delayed the imposition of the mandate until 2015. 

Of course there is zero evidence for this claim. If the mandate was affecting hours or hiring we should...

Does France or the U.S. Have a More Severe Problem of Youth Unemployment?

Of course all well-educated NYT reading types know the answer to that question is France. After all, the NYT ran an oped just last week telling young French people that they better get out of the country. (Actually, the idea of spending time in other countries is probably good advice for young people everywhere, if they can afford to do it.)

But in fact those who knowingly huff about the high youth unemployment rate in France are primarily displaying their ignorance. France does have a substa...

Washington Post Warns Economy is About to Start Shedding Jobs

On a day when most analysts were touting the 195,000 new jobs reported for June as better than expected, the Washington Post warned that things are about to take a sharp turn for the worse. It told readers:

"In addition, an index compiled by Gallup showed that job creation the past two months has been at the highest level since April 2008."

Of course April 2008 was after the recession had already begun and the economy was losing jobs. The Labor Department reported a loss of 215,000 jobs in Ap...

Reconciling Modern Monetary Theory with the Wisdom of Mark Thoma

The NYT had a brief discussion of Modern Monetary Theory (MMT) today in the context of a profile of Warren Mosler, one of its major proponents. The profile includes a dismissive comment from Mark Thoma, a professor at the University of Oregon and the creator of the blog, The Economist's View:

"They deny the fact that the government use of real resources can drive the real interest rate up ... I think it’s just nuts."

This description is not exactly right. MMT advocates would say that the Fed...