Dean Baker's Blog, page 385

NYT Really Misses Housing Story Big Time

The NYT headlined an article on the release of the newest Case-Shiller housing price data, "housing market shrugging off rise in mortgage interest rates." This may or may not be true, but the new Case-Shiller data will not provide us much information on this question.

The data released today was for the three month period ending in April. This means that the typical home in the sample was sold in March. It is also important to remember that the index picks up closings. Since it typically take...

Wow, the Wall Street Journal Still Has Not Heard About the Housing Bubble!

The Wall Street Journal seems to have completely missed the story of the housing bubble and the resulting economic collapse. It begins an article telling readers:

"After a slow start early in the economic recovery, consumer spending has begun to pick up. The question is whether Americans are ready to open their wallets more widely."

It is just mind-boggling to see this in the country's leading business newspaper. Umm, no actually wallets have been pretty wide open for a long time. The way tha...

More Thoughts on Patents and Copyrights

Since my comments on Greg Mankiw's defense of the one percent prompted so much response, I thought I should add some clarification on the treatment of patents and copyrights. First off, my main point is that these are government policies designed to meet a public purpose (i.e. promoting innovation and creative work), not natural rights that are an end in themselves. In this sense altering them does not raise questions of rights as would restricting the freedom of speech or assembly.

Those who...

Teaching Robert Samuelson About Supply and Demand

Last week we had to teach Robert Samuelson about inflation. He noted that the wealth of households was back to its pre-recession level, but spending was not. This led him to think that the wealth effect no longer applied. However, when we adjusted the data for inflation and then brought in Mr. Arithmetic it turned out that people were spending more than would be predicted by the wealth effect, not less.

This week it looks like we have to teach Mr. Samuelson about supply and demand. His column...

Tyler Cowen Goes Off the Track on China's Aging

Tyler Cowen has an interesting piece on the problems facing developing countries going forward. As he notes, these will be different in the future than they were in the past. However the piece is strange due to one of the items it mentions, the aging of the population, and one it leaves out, intellectual property claims. (Btw, Cowen references a column by Dani Rodrick as raising the issue of new problems confronting developing countries. Rodrick does not mention aging in his list of concerns....

Ireland Is Still Waiting for the Fruits of Austerity

Ireland has been repeatedly touted as a success story by advocates of austerity. However as Floyd Norris points out in a nice piece today, the widely touted turnaround is mostly a quirk in the data.

For tax purposes, several large UK companies have moved their headquarters from the UK to Ireland. This changes nothing in terms of Ireland's actual GNP, in the sense of money flowing to people living in Ireland, but it does lead to an increase in reported GNP. The profits of these UK companies n...

Plunging Global Stock Markets Do Not Show the Dependence of the World Economy on the Fed

Suppose the price of corn plummets. Does that mean that the world economy is going down the tubes?

Well, it could be the result of the collapse of demand in the world economy leading to less demand for all commodities or it may just be the result of a bumper corn crop. The latter would be good news for the world economy even though it would be bad news for farmers who produce lots of corn.

Such is the case with stock markets. Stock markets move up and down all the time often for reasons that...

The Bigger Problem With Mankiw's Plan to Give Everything to the One Percent

Chrystia Freeland notes the rapid growth in the wealth of the extremely rich. Then she follows Greg Mankiw in arguing that this growth is largely positive insofar as it resulted from people like Steve Jobs and J.K. Rowling producing great innovations or creative material enjoyed by hundreds of millions of people.

While Freeland notes problems from the resulting inequality, she does commit the same error as Mankiw in implying both that the enormous wealth of these people is a natural outgrowth...

Niall Ferguson: More Mistaken Musings from the Land of the Excel Spreadsheet Error

Harvard's standing in economic policy debates took a big hit when the famous Reinhart-Rogoff 90 percent debt-to-GDP growth cliff was shown to be the result of a simple spreadsheet error. Niall Ferguson's strange rant in the Wall Street Journal about the United States becoming the land of government regulation continues the downhill slide.

The gist of the piece is that the country is going down the road to economic stagnation and suffocating bureaucracy because of excessive regulation. The Aff...

Will Immigration Reform Do Wonders for the Budget? Does Anyone Who Reads the NYT Article on the Topic Have Any Idea?

Yesterday I got to make fun of the NYT for telling readers that food stamps was a $760 billion program. I thought they were giving the 10-year cost, but apparently they had just made a mistake and added a zero to the annual cost, as they later acknowledged in a correction.

This helped make my point. No one, apparently including the editors at the NYT, has any idea what these budget numbers mean. If the original article had told readers that spending on the food stamp program was roughly 1.8 p...