Dean Baker's Blog, page 405

An Aging Population and Drying Paint: Things People Worry About in Washington

From reading the newspapers and blogs you would think everything must be great in the country. Hey, no problems of mass unemployment, poverty, folks losing their homes, etc. How else can we explain the obsession with an aging population?

Yes, the population is aging, just as it has been aging over the last century. Yeah, we're living longer. You got any bad news for me?

Today we have Kevin Drum and Ezra Klein giving us the bad news. It seems Medicare's costs are projected to increase by 2.5 p...

It's the Dispersion Stupid: Why Men Don't Go to College

The NYT tells us that economists are struggling with cultural explanations for the fact that men's college enrollment rates have been lagging so far behind those of women. The issue is that we have seen a sharp increase in the gap between the wages of college and high school graduates over the last three decades. What economics tells us it that this rising return to a college education should cause more people to go to college.

This is exactly what has happened with women as their rate of col...

The Fed Has Better Memory Than Reporters Covering It

That would seem to be the case based on much of the news coverage of the Fed's decision to continue its quantitative easing program. Many pieces have highlighted relatively positive economic reports in recent months, most notably job creation numbers. Fortunately the Fed seems to have a much better knowledge of the data than the reporters who cover it. While job growth over the last few months has been somewhat higher than the average for the recovery, it does not stand out as being especiall...

Inaccurate Appraisals Don't On Average Prevent Home Purchases

A Morning Edition piece on the housing market blamed difficulties in the housing market in part on people being unable to get mortgages because of inaccurate appraisals. In fact, this should not on average reduce sales. While some sales will be prevented by an appraisal that wrongly comes in too low, some sales will go through that should not because an inaccurate appraisal comes in too high. Unless there is some reason there is a low side bias to the appraisals, inaccuracy by itself should n...

Teaching the Washington Post and Goldman Sachs About Employment in the Construction Industry

The Washington Post has a piece puzzling over the fact that:

"Builders started work on 27.7 percent more homes in February than they did a year earlier. Yet the number of construction jobs in the United States was only 2.9 percent higher, year-over-year."

The Post turned to analysts at Goldman Sachs, who concluded that the answer was labor hoarding. They make a case that firms are changing the length of the workweek to meet the increased demand for labor rather than adding more workers. This...

Patents and the Arithmetic of the Medical Device Tax

The medical device industry is pushing hard to repeal a tax imposed as part of the Affordable Care Act (ACA). The NYT had an article on its massive bipartisan lobbying effort. While the piece notes in passing that, "the White House argues that demand for new devices will offset the economic impact of the tax," the piece doesn't explain what this means.

The marginal cost of producing most medical devices is very low relative to their price. The companies are in effect collecting a big premium...

And We Know the Economy Is Picking Up Steam How?

Business news stories and op-ed columns are filled with comments about the economy picking up steam. The case is less obvious to those of us who look at the data. February's reported job growth of 236,000 wasn't bad, but it was not quite as good as the 271,000 job gain reported last February or the 311,000 new jobs reported for January of 2012. It pays to step back and look at the big picture. Most forecasts show growth under 2.0 percent in 2012. We have little reason at this point to assume...

David Brooks Tackles Progressive Caucus Budget: Remedial Logic to the Rescue

David Brooks has trouble with issues of logic and arithmetic as he frequently demonstrates in his column. His criticisms of the Congressional Progressive Caucus (CPC) budget suffer badly from this problem.

The piece begins by telling readers that the CPC has broken with past liberalism by seeing the government, rather than the private sector, as the engine of growth. His basis for this argument is that the CPC proposes a large program of public investment to restore the economy to full employ...

Robert Samuelson: "What Frustrates Constructive Debate is Muddled Pundit Opinion"

Okay, that's not exactly what Robert Samuelson said, but pretty close. He actually told readers:

"What frustrates constructive debate is muddled public opinion."

I just thought I would make a small change in the interest of accuracy.

Samuelson is very upset because almost no one, Democrat, Republican, or independent wants to go along with his crusade to cut Social Security and Medicare. He tells readers with disgust:

"In a Pew poll, 87 percent of respondents favored present or greater Social...

Capitalism, Steven Pearlstein, and Morality

The Washington Post had a major column by Steve Pearlstein on the front page of its Outlook section headlined, "Is Capitalism Moral?" The piece notes the sharp upward redistribution of income over the last three decades and asks whether we should just being willing to accept market outcomes.

Of course this question is absurd on its face. The upward redistribution of the last three decades was the result of deliberate government policies designed to redistribute income upward; it was not the n...