Dean Baker's Blog, page 413

Charles Lane Doesn't Like the Minimum Wage

That's what he told us in his column today, because he sure didn't make much of an argument. Lane cites several recent papers showing that the minimum wage has no negative effect on employment (including my colleague, John Schmitt's paper). He then notes that these studies could be right, but he also refers to research by David Neumark of the University of California at Irvine and William Wascher of the Federal Reserve that shows the last minimum wage hike (from $5.15 an hour in 2007 to $7.25...

NYT Finds Economists Without Names to Criticize Japan's Plans for Stimulus and Promote "Free-Trade" Agreement

Most economists have names, but the NYT managed to find some without names to give critical comments on the stimulus plans of Japan's prime minister, Shinzo Abe. An article on Mr. Abe's plans told readers:

"Economists say Mr. Abe’s policies so far contain few of the deeper-reaching structural reforms that they say are needed to produce sustainable growth by encouraging competition in Japan’s sclerotic economy. They say the most symbolic step would be joining a Pacific-wide free trade pact tha...

Using Deceptive Numbers on Health Care in the NYT

It is really easy and apparently fun for some people to use scary numbers about health care costs. The trick is to take numbers over a long period of time that are not adjusted for inflation or income growth. Of course no normal person has any idea what their income will look like in nominal dollars 50-60 years out, so you can scare people to death with this sort of stupid trick.

That is what David Goldhill, the chief executive of GSN, did in an oped in the NYT. He told readers about a newly...

Robert Samuelson's Psychological Problems

Robert Samuelson is convinced that the U.S. economy is suffering from psychological problems. In a piece titled, "why job creation is so hard" he tells readers:

"We have gone from being an expansive, risk-taking society to a skittish, risk-averse one."

Point number one is the rise in the saving rate:

"In the boom years, the personal saving rate (savings as a share of after-tax income) fell from 10.9 percent in 1982 to 1.5percent in 2005. Now it’s edging up; from 2010 to 2012, it averaged 4.4...

Washington Post Gets Award for Reporting on Corrupt Pharma Practices

This one is well-deserved. The Post got the George W. Polk award for Medical Reporting for the series “Biased Research, Big Profits” by Peter Whoriskey. It was a well-researched and reported series. I take back 17 of the bad things I've said about the WAPO. I'm not commenting on how many that leaves.

The Post Discovers the Shortfall in Retirement Income

The Post had a very nice lead front page story, too bad its editors probably won't see it.

The Educate a Cab Driver, Educate Thomas Friedman Campaign

Thomas Friedman is once again mass marketing misinformation on economics, something that he does all too frequently. Just about everything in the piece is 180 degrees wrong: the Friedman standard.

It begins by telling us that Tim Cook and Apple are sitting on $137 billion that they could be investing:

"Apple is currently sitting on $137 billion of cash in the bank. There are many reasons Apple has not spent its cash horde, but I’ll bet anything that one of them is the uncertain economic and t...

Can We Cut the Crap on Robert Rubin and Deficit Reduction

Robert Rubin is best known as the man who pocketed more than $100 million as a top Citigroup honcho as it played a central role in pumping up the housing bubble that sank the economy. However, because of the incompetence (corruption?) of the Washington media, he is much better known as a great hero of economic policy.

Ezra Klein helps to feed this myth when he tells us of the great virtue of deficit reduction in the Clinton years.

"Back in the 1990s, we knew why we feared deficits. They rais...

The Government Spends $100 on Bondholders for Every Dollar It Spends on Children

Okay, I made up that number, but suppose that I did calculate the amount of money that average holder of government bonds gets in interest each year and compared it to what we spent on children. According to the logic that they use at the Urban Institute (as recounted by Ezra Klein) I would have demonstrated a tendency for our government to favor bondholders at the expense of our nation's children.

The sophisticates out there would surely point out that bondholders paid for their bonds and th...

Neil Irwin Says Fund Managers are Too Dumb to Breathe

He may well be right. His story is that the yield on junk bonds is currently lower than the earnings yield on stock. Irwin tells readers:

"The stock market’s earnings yield is 6.6 percent, which is actually higher than the 6.1 percent that junk bonds are yielding. Buyers of junk bonds are tolerating lots of risk and not even being compensated. That suggests a market that is somehow out of whack. And there’s a quite plausible case that the Federal Reserve’s quantitative easing policies are par...