Dean Baker's Blog, page 403

NYT Gives the European Austerity Crew Short Shrift

The austerity gang who are trying to wreck Europe's economy must be furious at the NYT. They managed to get the unemployment rate up to 12.0 percent, a truly historic achievement. Europe had not seen unemployment reach this level since the Great Depression, more than 70 years ago.

However in its article reporting on the new data NYT told readers:

"The European labor market has now declined for 22 straight months, making this the worst downturn since the early 1990s, Jennifer McKeown, an econo...

Just Because the Washington Post Got Fooled by the Economy, It Doesn't Mean That Everyone Else Did

The Washington Post ran a piece titled, "the April Fool's Economy," that began by telling readers:

"The economic recovery has faked us out before."

It continued:

"In 2012 and 2011, seemingly strong momentum in the first half of the year gave way to summer slumps. Will the third try be the charm? Or is this just another prank — one that’s getting old fast."

Huh?

In 2011 the economy grew at a 2.5 percent annual rate in the second quarter and just a 0.1 percent rate in the first quarter for a fi...

Washington Post Finds Fracking Led Manufacturing Boom, that NYT Misses

It's always fun when major news outlets look at the same economic situation and come up with directly opposite conclusions. Hence we had the Washington Post telling readers,

"European industry flocks to U.S. to take advantage of cheaper gas,"

on the same day that the NYT had a piece headlined,

"rumors of cheap energy job boom remain just that."

When it comes to data, the NYT clearly wins the case. The Post piece has people whining about high gas prices in Europe, but little evidence of jobs...

Debt to GDP Ratios: Why Not Make the Numerologists Happy?

Numerology is usually held in low regard in intellectual circles. Unfortunately it is front and center in the debate over national economic policy.

Many economists and political leaders tell the public that we have to keep the DEBT to GDP ratio (capitalized to show reverence) below some magical level. Greg Mankiw professes his adherence to the faith in the NYT on Sunday. The reason that either a specific number or a strict focus on debt to GDP ratios is viewed as silly by people who are not n...

Robert Samuelson Thinks We Don't Give Trade Enough Credit

Following in the footsteps of his colleague at the Post, Dylan Matthews, Robert Samuelson devoted a column to a new book on trade by Robert Lawrence, complaining that we don't give enough credit to trade. I won't rehash the basic points that Samuelson gets wrong. However it is probably worth going through the basic story as to how trade can lead to overall gains to the economy and yet hurt large groups of workers.

Suppose that we diverted 6 percent of the current flow of immigrants so that in...

Thomas Friedman Invented His Own Job, Why Shouldn't You?

Imagine getting paid to write things on economics that don't make sense for the New York Times? That job may not exist if Thomas Friedman didn't invent it. Hence the headline of his Sunday column, "Need a Job? Invent It."

As Friedman tells readers, you need to create your own job because:

"there is increasingly no such thing as a high-wage, middle-skilled job — the thing that sustained the middle class in the last generation. Now there is only a high-wage, high-skilled job. Every middle-class...

Wall Street Journal Discovers CEPR's Findings that Many College Educated Workers Are Getting the Minimum Wage

It's always nice when a major news outlet picks up on work by CEPR, even if it takes a year and some other economist to produce similar findings. Therefore I was naturally happy to see this piece in the Wall Street Journal reporting that almost 300,000 college educated workers are earning the minimum wage.

The WSJ piece is based on a new paper by three Canadian economists that finds that many college educated workers are employed at jobs that don't require college degrees. This is bad news no...

Washington Post Confuses Saving the Financial Industry with Saving the Financial System

The Washington Post published excerpts from reporter Neil Irwin's new book,The Alchemists: Three Central Bankers and a World on Fire, under the headline, "three days that saved the world financial system." The headline is seriously misleading since it may cause readers to believe the world somehow would have lacked a financial system if the central bankers in Irwin's story had not succeeded in their efforts.

This is not true. Had a financial collapse actually been the outcome, the central ban...

Profit Share Hits Post-War High and the Post Doesn't Notice

The revised GDP data for the fourth quarter released yesterday showed the profit share of corporate income hitting 25.6 percent. This is the highest since it stood at 25.8 percent in 1951. However if we look at the after-tax share of 19.2 percent, we would have to go back to 20.8 percent share in 1930 to find a higher number, excepting of course the 19.3 percent number hit last year.

To put this in context, the after-tax profit share was just 14.5 percent in Reagan's Morning in America days....

Warning: Wealth Comparisons by Age Group Through Time Are Bogus!

The NYT commits the common sin of making such comparisons in an otherwise useful piece on the economic plight of millennials. It tells us:

"The average net worth of someone 29 to 37 has fallen 21 percent since 1983; the average net worth of someone 56 to 64 has more than doubled."

Of course we should be looking at medians, not averages, since Bill Gates' immense wealth doesn't help the rest of his age cohort. When we look at medians, the rise in wealth for older workers is much smaller, trail...