Dean Baker's Blog, page 401

Charles Lane Beats Up on the Disabled, Again

With the economy mired in its longest period of high unemployment since the Great Depression, the richest one percent getting near all of the gains from economic growth, and a thoroughly corrupt financial sector surviving the crisis largely intact, the thoughts of folks like Washington Post columnist Charles Lane naturally turn to the Social Security disability program. Lane is upset because the cost of the program has been rising rapidly.

The most immediate reason for this increase is the ec...

Fun With Debt and Deficits

Dylan Matthews had a nice piece explaining why we need not worry about current deficits and the relatively high debt to GDP ratio. He left out one very important reason, probably to avoid making prominent economists look stupid.

The debt to GDP ratio is to some extent an arbitrary number. The point here is that the price of long-term debt (e.g. 10-year and 30-year bonds) fluctuates with the interest rate. Currently bond prices are very high because interest rates are very low. However if inte...

WSJ Finds the Real Cause of Weak Recovery: Disabled Workers

Folks who follow the economy might have thought that cutbacks in government spending, the continued weakness of construction, or the large trade deficits were the causes of the slow recovery, but the WSJ has the real scoop: it's workers going on disability. The WSJ ran a piece headlined,"Workers Stuck in Disability Stunt Economic Recovery," that told readers:

"The unexpectedly large number of American workers who piled into the Social Security Administration's disability program during the re...

The Job Numbers Were Not "Far, Far Worse Than Anyone Anticipated"

Why do they let Cokie Roberts get on NPR and say such things? (Sorry, it's not posted yet.) Yes, the numbers may have been worse than what the experts whom NPR relies upon expected, but it was not a big surprise to people who follow the economy closely. (My forecast was 150k. The March jobs number, plus upward revisions for the 2 prior months, was 149k.)

Roberts also claimed that President Obama's budget proposal, with its big cut to Social Security, is an effort to appeal to centrist voters....

Robert Samuelson Spreads Confusion on Manufacturing

The Washington Post seems to have a quota for pieces that spread misinformation on manufacturing. Today's piece by Robert Samuelson fills the quota for the day.

The gist of the piece is that manufacturing employment has been declining in importance in the U.S. for decades and also everywhere else around the world. Therefore we should not expect any substantial boost to manufacturing employment.

This is the sort of three-card Monte story that people expect from the Post when discussing economi...

Gretchen Morgenson on CEO Pay

Gretchen Morgenson reports on limited progress in reining in excessive CEO pay. Here's the promotion for Director Watch, CEPR's entry in the area.

Restaurant Employment Rises When the Labor Market Is Weak

This simple point is shown nicely in a graph in Catherine Rampell's Economix blogpost. The point is simple. Restaurants always want to hire people at low pay and with few benefits. In a weak labor market they can. When we have periods of low unemployment, like the late 1990s and 2005-2007, workers have better options.

The Missing Workforce: It's Worse Than the Post Says

The Post had a good piece noting the large number of people dropping out of the workforce, presumably because they can't find jobs in the weak economy. However the problem is likely worse than the piece indicates.

There are a large number of people who do not respond to the Bureau of Labor Statistics' Current Population Survey (CPS), the standard survey used to measure labor force participation. AIn recent years the non-response rate overall has been close to 12 percent, as opposed to just 5...

The Media Again Turn to Surprised Economists as Experts on Job Report

It was easy to see that the economy was not growing rapidly long before Friday's jobs reports. The economy grew at just a 0.4 percent annual rate in the fourth quarter. While this weakness was largely attributable to unusual factors, even averaging in the prior quarter the economy only grew at a 1.7 percent rate in the second half of 2012.

It's not clear what someone would have had to have been smoking to expect a marked upturn from this pace. Did they think the ending of the payroll tax cut...

The Government Could Save Money on Financial Oversight by Finding Someone Who Knows Arithmetic

The Washington Post has a lengthy piece discussing the new Office of Financial Research that was set up as part of Dodd-Frank. The purpose of the office is ostensibly to prevent another financial crisis. The article focuses on the supposedly brilliant people who are staffing or advising the office and sophisticated tools that they intend to use on their job.

In fact, it was only necessary to have someone familiar with basic arithmetic and economics to prevent this crisis. It was easy to see...