Dean Baker's Blog, page 389

Backward Economics on Turkey

The NYT gets the economics upside down in a piece discussing the protests in Turkey. At one point it tells readers:

"And like Spain and Greece before 2008, Turkey runs one of the largest current account deficits in the world, at around 7 percent of G.D.P. That, economists say, sets in motion a vicious circle as an overheated economy sucks in imports. That, in turn, creates a stronger currency that hurts the country’s exports, forcing Turkey to borrow ever more to finance the gap."

Okay, so we...

How Is It Silly to Ask If Higher Deficits Will Have a Negative Impact on Growth?

Clive Crook told readers in a Bloomberg column that:

"It’s silly to ask whether high public debt causes lower growth or vice versa as though it must be one or the other. Almost certainly, both are true. This reinforces the case for fiscal consolidation as the recovery strengthens -- not just to restore fiscal room for maneuver but also to support longer-term growth."

Both parts of this statement are close to ridiculous. How do we know that higher debt everywhere and always leads to slower gro...

It Isn't Trade Deals That Prevent the Obama Administration from Lowering the Value of the Dollar

Harold Meyerson has an interesting column warning of conditions that are likely to be in the Trans-Pacific Partnership. However it is misleading in one important respect.

At one point the article notes efforts by Senator Sherrod Brown to require rules that will the United States to retaliate against currency "manipulators," countries that deliberately prop up the value of the dollar against their own currency in order to increase their trade surplus. This is misleading because the United Stat...

The Food Stamp Fight

Congress is debating whether to cut the Food Stamp program, the government's main nutrition program for low-income families. The coverage of this debate is a great example of "fraternity reporting," that is reporting that shows you are a member of reporters fraternity but has nothing to do with informing the audience.

We see this by the convention of referring to the $80 billion annual budget for the program (here for example). It is standard practice to refer to the dollar amount being spent...

ISM Manufacturing Index Shows Rate of Change, Not Levels

Come on folks, know what you are reporting. A NYT headline telling readers, "U.S. manufacturing gauge falls to June 2009 level," makes no sense. The index, the Institute for Supply Management index of manufacturing activity, shows changes in manufacturing, not levels. This means that the comparison to June 2009 is at best misleading.

The June measure came after many months of severe contraction that was gradually coming to an end. The April reading follows more than three years where the inde...

The Most Depressing Blogpost in a Long Time

Brad Plummer shows us two charts from a new publication from the International Labor Organization (ILO) that purport to tell us we face a tradeoff between job quality and jobs. The charts, one for wealthy countries and one for developing countries, seem to show that countries that had a deterioration in job quality saw the most job growth.

 

That would be bad news. The intended take away is that if we want to have jobs then workers will have to take lower pay and fewer benefits. However...

The Fed, Inequality and Accounting Identities

Annie Lowrey at the NYT continues a mini-debate about whether the Fed is promoting inequality with its quantitative easing program. The argument is that by pushing down interest rates it is contributing to the run-up in stock prices and housing prices. Since stock is hugely disproportionately held by the wealthy and homeowners are better off than the population as a whole, this policy is increasing inequality.

This is undoubtedly true, although the extent of the impact can be debated. (High c...

Larry Summers Still Hasn't Heard About the Stock Bubble

It looks like more trouble with Harvard economists (e.g. Reinhart-Rogoff). It seems Larry Summers, who was Treasury Secretary in the last two years of the Clinton administration, is still unaware of the stock bubble that propelled growth in those years.

In a Post column today he tells readers:

"As a consequence of policy steps in 1990, 1993 and 1997 [deficit reduction measures], it was possible by 2000 for the Treasury to retire federal debt. Deficit reduction and the associated reduction in...

Robert Samuelson Says that Apple Has More Lines of Business Than It Can Reasonably Manage

Actually he made the claim about the government, telling readers:

"Since World War II, American government has assumed more responsibilities than can reasonably be met. Some are unattainable; others are in conflict. Government is, among other things, supposed to: control the business cycle, combat poverty, cleanse the environment, provide health care, protect the elderly, subsidize college students, aid states and localities. There are more. Most are essentially postwar commitments. As I’ve w...

Look Mom, No Patents: Cheap Test for Cervical Cancer Developed With Public Funding

Great story in the Washington Post (in the sense of very good news) about the successful trial in India of a cheap vinegar test for cervical cancer. According to the article this cheap and easy to administer test can substantially increase the early detection of this cancer. This test can save the lives of tens of thousands of women in India and elsewhere in the developing world who do not have access to more expensive tests.

An interesting and important sidebar is that it seems that this tes...