Dean Baker's Blog, page 395

NYT Makes Amends for Piece on Danish Welfare State

A couple of weeks ago the NYT had a piece offering a dire prognosis about the prospects for the Danish welfare state. I pointed out that this assessment did not fit the data, with Denmark doing considerably better than the United States on most standard economic measures. Nancy Folbre also wrote about Denmark's welfare state in her Economix piece in the NYT last week. Today, the paper has a useful "Room for Debate" segment on the Danish welfare state. It would be great if this sort of exchang...

Tyler Cowen Recognizes Public Goods Problem of Pandemics: More Money for Drug Companies

Showing the sort of creativity that we have come to expect from economists, Tyler Cowen used his NYT column today to call for giving more money to the pharmaceutical industry as a way to deal with the risks of pandemics. Cowen moves from the true statement that research and development into prescription drugs and public health more generally has a substantial public good character, to the idea that we need to give pharmaceutical companies more money in order to get them to do the research.

In...

College Grads Have Been Hard Hit by the Recession Also

A NYT piece headlined, "college grads fare well in job market even through recession," painted a misleading picture of the job market facing college grads in the downturn. First, the claim at the center of the piece, that college grads have gotten the bulk of the jobs in this recovery, is badly distorted by the pattern of retirements. The aging baby boomers who are leaving the labor force are much less likely to be college grads than the young people just entering, so even if there were no ch...

More Bipolar Economic Reporting at the Washington Post

The April Jobs report was better than most economists (including me) had expected. Better news is always better than worse news, but it was one report amidst a lot of other less than stellar news. Furthermore, it just was not that good.

Nonetheless the front page Post story hyped the good news in the report and told readers [in print edition only]:

"The jobs report could also have significant implications for the Federal Reserve's $85-billion-a-month stimulus program. .. The program is tied t...

The European Central Bank: Good Paying Jobs for People Without Skills?

Robert Samuelson actually has a useful column today pointing out the imbalances that underlie the problems in the euro zone. The basic point is that the bubbles of the last decade led to a situation where prices in the crisis countries are hugely out of line with prices in the core countries, most importantly Germany. This means either substantial deflation in the crisis countries, considerably more rapid inflation in Germany and other core countries, or someone leaves the euro.

Samuelson ri...

The Housing Experts on the WAPO's Rolodex Never Heard of Jumbo Mortgages

That's what readers of a Post article discussing the future of Fanne Mae and Freddie Mac would conclude. The piece includes assertions from two experts, David Stevens, president of the Mortgage Bankers Association, and Julia Gordon, the director of housing finance and policy at the Center for American Progress, that 30-year fixed rate mortgages would disappear if the government did not guarantee these mortgages through the GSAs or some other mechanism.

This can easily be shown not to be true...

Thomas Friedman's 401(k) Agenda

Thomas Friedman is probably best ignored, but there are people who take him seriously. Today his NYT column touts the "401(k) world" where Friedman says:

"But this huge expansion in an individual’s ability to do all these things comes with one big difference: more now rests on you."

The gist of the argument is that people are more exposed to risk so that means that they can fall farther or, in principle, rise higher than before all the wonderful new technologies that leave Friedman breathless...

Failed Rescue Attempt of Reinhart-Rogoff

In a Bloomberg column, Matthew Klein gives a brief discussion of errors in New Zealand GDP numbers that he claims supports Reinhart-Rogoff over their critics at the University of Massachusetts, Thomas Herndon, Michael Ash, and Robert Pollin (HAP). However the numbers he gives do not support his case.

He claims that the UMass trio relied on mistaken numbers from the Maddison Project, which is generally taken as an authoritative source on GDP. However, Klein claims that the data given for...

Washington Post Continues Myth that Trade Has Not Hurt Manufacturing Workers

The Washington Post is one of the most ardent supporters of the policy of selective protectionism. This policy is designed to redistribute income upward by deliberately putting less educated workers in direct competition with low-paid workers in the developing world, while maintaining or increasing protectionist barriers that prevent highly educated professionals like doctors and lawyers from facing the same sort of competition. The predicted and actual result of this policy has been to redis...

Homeownership Plummets and No One Notices

Okay, neither part of that one is exactly right. According to the Census Bureau the unadjusted rate of homeownership in the first quarter of 2013 dropped by 0.4 percentage points to 65.0 percent. The seasonally adjusted rate edged down by 0.1 percentage point to 65.2 percent. Okay, this may not be a "plunge," but either way you would have to go back to 1995 to find a lower rate of homeownership. (Can we get Alan Greenspan out here to give us another lecture on the glories of subprime and othe...