Dean Baker's Blog, page 406

The Collapse of the Housing Bubble Was Great News for Young People

The NYT had an interesting piece on new research from the Urban Institute showing that young people are faring very poorly in the economy. In presenting the list of problems facing young workers it included the collapse of the housing bubble.

In fact this was great news for young people in terms of their ability to buy homes. (The impact on the economy was of course devastating.) Since the overwhelming majority of young workers were not homeowners prior to the collapse of the bubble, the drop...

Sure the School Is On Fire, but No One Is Talking About Repainting the Cafeteria

That could have been the title of a Washington Post editorial that criticizes the budget produced by Senate Democrats because it doesn't address the possibility that we will have a rising debt to GDP ratio in 2023. After all, millions of lives are being ruined by the high unemployment that resulted from the ineptitude of the people that the Post views as experts on the economy. The Post is completely unconcerned about this crisis. Instead it is very upset that Senate Democrats are not worried...

Ezra Klein Gives Real Coverage to the Progressive Caucus Budget

This is what reporters/columnists are supposed to do. His column is not an endorsement, it just lays out the benefiits and downsides of a serious budget. What a novel idea.

Addendum:

I noted the comments below on Zandi's concern that stimulus is not needed because the economy is kicking inot a higher gear. FWIW, Zandi has seen the economy kicking into a higher gear numerous times over the last four years.

For example, in December of 2010 he told David Leonhardt:

"In my previous baseline I exp...

Steve Rattner: Stop Stealing from Our Kids!

Steve Rattner wants someone to stop stealing from our kids according to the headline of his blogpost in the NYT. The finger should be pointed backwards in Rattner's case because if anyone is going to jeopardize the living standards of our kids it is wealthy people like Mr. Rattner.

We have seen an enormous upward redistribution of income over the last three decades. As a result most workers have seen little of the benefits of economic growth. If this upward redistribution continues, then our...

The Value of the Dollar Does Not Tell Us About the Strength of the U.S. Economy

Yes, boys and girls and Arnold Schwarzenegger fans everywhere, a strong dollar does not mean a healthy economy, contrary to what Neil Irwin told us today in the Washington Post. In fact, fans of arithmetic and believers in accounting identities know that an over-valued dollar is at the root of our current economic problems. While believers in the Confidence Fairy think that investment will reach new highs as a share of GDP, and/or consumers will spend even when they have little wealth, those...

Hold the Champagne on that Celebration Over Ireland

The Washington Post had an article that touted Ireland's success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:

"In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?"

While it is undoubtedly good news that the Irish government can re-enter credit markets,...

The Main Reason Medicare Part D Cost Less than Expected Is the Drug Companies Stopped Innovating

Paul Howard celebrates the lower than projected cost of the Medicare prescription drug program and attributes it to the role of private insurers. In fact, the main reason that Part D has cost less than projected is that the rate of increase in drug prices overall has been far less than projected. This in turn is attributable to a sharp fall in the number of breakthrough drugs.

If Howard wants to blame the collapse of innovation on the use of private insurers to deliver the Medicare drug benef...

Economists Generate Confusion About Poverty: Old and Young

Given the disastrous failure of the economics profession to warn of the housing bubble, it is amazing that the country has not rounded up the lot of us (I'll go too) and chased us out of the country. Unfortunately, we still have a profession continuing to use its authority to spread confusion rather than enlightenment.

Thomas Edsall and his readers are the victims today. In an interesting discussion of trends in poverty, Edsall includes a reference to work by Bruce Meyer and James Sullivan th...

Ruth Marcus Is Unhappy That Partisans in Today's Politics Have Their Own Facts

Good complaint, maybe she can talk to the Washington Post's editorial board who are such huge supporters of NAFTA that they decided that Mexico's GDP had quadrupled from 1987 to 2007. The data show a rise of just 83 percent. It would be great if the country had newspapers that didn't insist on inventing their own reality to advance their agenda.

Does Paul Ryan Want to Change the Relationship Between Americans and Their Government or Give Money to Rich People?

Ezra Klein looked at Paul Ryan's latest budget and told readers:

"Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career."

Well, that is one possibility. There is another option: Paul Ryan wants to makes rich people richer. I think the evidence supports the latter view.

Let's look at some of Ryan's trademark poli...